For a given body position, you're actually more aero with your arms on the hoods up top then in the drops. You don't "scoop up" as much air.

The drops are a superior hand position when descending, cornering, sprinting, or to protect them in tight quarters with other riders, so you don't get them hooked and crash. Basically when safety and/or bike handling is the utmost concern. More aero they are not.