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Global Vice Index: Cigarettes, alcohol cheapest in Luxembourg, most expensive in Ukraine

Americans had to fork out over $200 more for a basket of so-called vice goods last year versus 2016, with only New Zealand seeing a bigger increase.

fitness Updated: Apr 04, 2018 17:35 IST
Bloomberg
Costs More To Drink,Alcohol,Smoking
Ukrainians must spend 13 times their weekly salary for the same fix, making it one of the costliest places for those making local wages(Shutterstock)

The cost of maintaining a drugs, booze and cigarettes habit got a lot more expensive in the U.S. last year, rising the most of almost anywhere in the world, the annual Bloomberg Global Vice Index shows.

Americans had to fork out over $200 more for a basket of so-called vice goods last year versus 2016, with only New Zealand seeing a bigger increase. The gauge compares the share of income needed to maintain a broad weekly habit of cigarettes, alcohol, marijuana, amphetamines, cocaine and opioids across more than 100 countries. Doing so eats up more than a third of the average weekly paycheck in more than three quarters of the economies tracked, the index shows.

The gauge is purely an economic indicator, not a judgment about morality or legality. Nor does it track gambling, prostitution or other illicit activities.

Vice is cheapest in Luxembourg, where the cost comes in at less than 10 percent of the $2,071 average weekly wage, which is the highest in the world. The Bahamas, Switzerland, Iceland and France round out the top five for affordability.

Vice is cheapest in Luxembourg, where the cost comes in at less than 10 percent of the $2,071 average weekly wage, which is the highest in the world. The Bahamas, Switzerland, Iceland and France round out the top five for affordability.

By contrast, Ukrainians must spend 13 times their weekly salary for the same fix, making it one of the costliest places for those making local wages. Pakistan, Nepal and Burkina Faso also score near the top for higher prices. The vice indicator uses U.S. prices as the global benchmark. At 54 percent of pay, or $617, U.S. ranked 38 in terms of affordability, compared with 17 a year earlier.

Online Sales

In absolute terms, the gross weekly cost exceeded $1,000 in only three countries: Japan, New Zealand and Australia. By comparison, an equivalent basket ran less than $100 in 21 mostly tropical countries, including the Dominican Republic, Ghana, Congo, Colombia, South Africa, Guatemala, Kenya and Myanmar.

The Bahamas, Switzerland, Iceland and France round out the top five for affordability. (Shutterstock)

While laws remain a key factor for narcotics prices, those dynamics may be in flux as more drug sales move online. The new avenues make some drug markets less risky as they let users “buy drugs with a cryptocurrency, such as Bitcoin, and have their purchases delivered to them in a concealed manner,” the United Nations 2017 World Drug Report says.

“Something like Bitcoin has appealed to dealers because it’s anonymous,” said Jonathan Caulkins, a professor at Carnegie Mellon University in Pittsburgh and former co-director of RAND’s Drug Policy Research Center. “Banking creates a trail that they don’t want.”

Shadow Economy

Vice prices tumbled the most in Iran, Norway and South Korea, all of which saw the weekly tab for the basket of drugs, alcohol and tobacco fall by more than $200 from the prior year.

The difficulty in collecting data on illegal activity means survey responses often have a lag, which makes comparisons harder. As a result, nations with missing data weren’t included in the overall index and those with data had wide estimated ranges.

This year’s Bloomberg Vice Index also included the size of the “shadow” drug economy in different regions by approximating the retail value of narcotics seized by law enforcement.

Like other businesses, retail-wholesale pricing dynamics and supply-chain management are the keys to efficiency. “A shadow economy, or underground economy, is run as an efficient business like the official one,” said Friedrich Schneider, an economics professor at Johannes Kepler University in Linz, Austria.

Competitive Cannabis

On markups for narcotics prices, “cannabis markets tend to be more competitive in most countries, especially because it is frequently produced locally,” according to Manolis Galenianos, an economics professor at Royal Holloway University of London.

“Cocaine and opioids, by contrast, have to be imported from abroad, which requires a much higher level of sophistication and is, therefore, done by only a few organizations,” leading to more concentrated markets and higher markups, Galenianos said.

Bloomberg’s vice basket tracks average retail prices for: A pack of cigarettes, popular and premium A bottle of alcoholic beverages including beer, wine and spirits A gram of amphetamine-type stimulants, including methamphetamine and/or ecstasy A gram of cannabis, including marijuana hashish resin and/or cannabis oil A gram of cocaine, regardless of salts, paste or base forms A gram of opioids, including heroin and/or opium.

Data are sourced from the UN, World Health Organization, World Bank and International Monetary Fund.

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First Published: Apr 04, 2018 15:56 IST