convergence

Picard
have died because they have used ineffective counterfeit medications. A report uses a rough
estimate of the percentage of counterfeit medications and the probability that untreated sick
people will die from a given disease, to infer that for malaria, 250,000 people would die per year
from counterfeit medications. 47 The same report estimates that 450,000 people die because
of ineffective treatment caused by counterfeit or substandard tuberculosis medication. While
we stress that this is a rough estimate and the overall impact of counterfeit and substandard
medications is far from being fully understood, those 700,000 deaths remain a reasonable
calculation based on the available evidence.
We may infer an economic cost for these deaths by using market estimates for the value
of a statistic life (VSL). Typical VSL values in the United States are in the range of $5 million
to $12 million (median of $7 million). 48 Although VSL estimates are less well known for
low-income countries, an elasticity of 1.0 is commonly used. 49 The GDP per capita in the
United States is around $50,000 per year, and the GDP per capita for low-income countries
where most of these deaths occur is on the order of $2,000 per year. Therefore, using the median
VSL of $7 million in the United States and an elasticity of 1.0, the VSL for low-income
countries is estimated at $280,000. For this VSL, the total economic value of these deaths
would be $196 billion.
Human Trafficking
As we have seen earlier, human trafficking generates revenue at $32 billion per year. Using our
cost of crime ratio of 1.5, this revenue pocketed by organized crime causes indirect impacts
valued at $48 billion. Regarding direct impacts, a lower bound would be to consider the revenue
of $32 billion of which victims of human trafficking are deprived. But a more accurate
economic valuation of the harm might be to consider that victims are deprived of one year of
quality life. Recent research shows that one year of quality life is worth on average $129,000
in the United States, that is, 2.58 times the U.S. GDP per capita of $50,000. 50 Assuming that
trafficked people are deprived of 100 percent of a year of quality life, and that a year of quality
life can be valued proportionally to GDP per capita, a rough economic valuation of those lost
years of quality life would be given as follows: $32 billion x 2.58 = $83 billion.
Excised Goods
Each illicit package corresponds to a direct and precisely known loss of tax revenue. Government
losses can be directly inferred from statistics on the number of illicit products on
the market. This involves an addressable direct impact of $31 billion. The main other direct
impact is related to public health: a report on tobacco taxation, using a transparent model
that incorporates price elasticity of demand, calculates that if the illicit trade in tobacco was
eliminated, consumption would drop by 2 percent. This would translate into 160,000 lives
saved per year from 2030 onward. Given the estimated $193 billion per year in healthcare
expenditures and productivity loss from smoking in the United States, 51 a 2 percent drop in
consumption would be worth close to $4 billion per year. On a worldwide basis, 2 percent of
an estimated $500 billion each year in healthcare expenditures, productivity losses, and other
costs 52 would be worth $10 billion per year. The total direct impacts are therefore estimated at
$41 billion. Regarding indirect impacts, we assume that organized crime captures 50 percent
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