Tobacco Documents Online

recogr.izing that the latter would have to be d iscounted to re0ect their later occurrenx. In addition, Schelling (1987) statea: Careful estimates have not been done for t.be-United States, but it seems-a reasonable guess -that the bealth-eare costs that are obviated by premature deaths attnbutable to tmolang are-at least the order of magnitude of the bealth~are _ costs attnbutable to fatal smoking-induced illness. These are reasonable- arguments- but they are not based on -data from-definitive studies that examine medical utilization by smoking status in old age. Deferred M8ess and compression _ of - morbidity in advanced ages may be the outcome-of lifelong nonsmoking and hygienic behaviors. Excess morbidity from smoking is latown to extend throughout the lifespan (Hermanson et aL, 1988). [3] Do nonsmokrrs -rost more than smak= in ScciaB S¢curity and pen.sion-cldi:rrts? Warner (1987) notes that extended longevity for a 3obacco-free society would also increase the number of people livi.ng well into retirement and increase the burden on -pension plans and Social Security. ScSelling (1987) showed this by a simple -numerical exercise and then- - concluded that 'people who smoke and-die 15 years early- are net _financial benefactors to the - rest of society, by living most of a normal productive-tax-paying life and dying before they can - claim their retirement benefits.' However, Social Security-and pension claims are regarded by economists as transfers, or purely financial transactions, in contrast to expenditures for goods or services (Scbellang, 1987). Rce and colleagues-~19fi6) state: Social Security, _pensions and disability and_ sickness payments to _ill stnokers subsidized by non3mokers (and smokers who do not sufyer tU bealth_et~`,ects), and payments forgone to smokers who die prematurely to the benefit of nonsmokers are also payments which transfer controt over- the -use of resources -from_ one segment of society to another. Iley do not represent the monetary value of resource lbsses caused by smoking and are not benefits or costs to society as a whole .:.These transfer pa;!ments-can be important economic values in the social decision-making process and assist in determining the societal response to smoking activities. Although each of these authors makes an accurate economic statement, all recognize that the valuation of human life- a.nd health extends far beyond economics. [4] WhQt if the ACt economic i7npOd of C3gQrme SlnokGng? A broader analysis by Schepiing ;1957) and Warner (19$7) fulfills an important need identified _ in a review of the economic literature on_cosu of smoking (Shultz, 19RSa=). :a Warner's (1987) depiction of health and-economic outcomes-of a=tobacco-frce society, the net economic impact of a tobacco-f;ee society is desenbed as unclear. Econometric modeling studies bave suggested that, in the absence of extensions in-the age-of retirement and mechanisms for financial support

of the retired pcpulation, movement toward a nonsmoking society may be recessionary in the long term (Richter and Gori, 1980). Shifting and partially- offsetting economic effects may occur during the next several decades while smoking rates dec!ine. - At this -titne, however, a tobacco-free society has not been achieved, and the economic burden associated with disease due_ to_ lifetime tobacco use is real and calculable. The net economic etlect of cigarette smoking in the future is_ speculati+e. Interpretation -and-iJse of the Fstimates Smoking-attrybutable disease impact estimates should be described sn-scienti6c, government, and public foeums- as a z;ustee of _related measures that assess the health and economic conse- _ queacea of cigarette smok:ng. It is appropriate to apply the data_ as general benchmarla; they do not represent precise point estimates. With SANLAEC II, these multiple measures are -- tadored to local conditions and experience, but they do not account for all health and economic eHects. Tbe generation of e:itimates of the disease impact of-smoking may be accompanied by- uncritical use of the data. Warner (1987) as3at7s the dogmatic and uninformed use of emnomic- calcuiations by antitobacco activists: - .. the esseniiai question is not the precise magnitude of the social costs, but rather their qualitative meaning. As they are used by some antitobacco activists and legslatorla lobby~ng to restrict tobacco use, their intended implication is clear. tobacco use is imposing an economic burden on society thst is avoidable; smokers are imposing costs or nor,smokers _. Smoldng is costly in terms of productivity losses. The per person-lifetime medical costs for smokers may be greater than (Izwit, 1983), equal to (Leu and Schaub, 19$?), or less than (Schelling, 1987) that for nonsmokers. However, whether smokers cost nonsmokers money, or vice versa, is unresolvui. The public re.spo= -to the epidemic of smoking-related diseases involves individual behavioral change and modificacion of the e~nvi,ronment= Smokitsg-attnbuiable disease impact estimates are developed in a pubU health context in which a value is placed on- living healthfully to full life eapectanry; in this crznteatt, cigarette smoking is perceived as a threat to the collective health of society. As with other scientific statements, particularly those r eleased under the aegis of a national- or State health agency, disease impact estimates are a form of argument and have a political as well as a scientific basis. The technology of SA1:IIvMC II software enhancea tbe credibility and perceived authority of disease impact estimates.

We alert rr.~earchera-and- policymakera to the possible misuse of SAIvV~IEC II disease impact estimates by misinterpretation,-overinterprctation, failure to appropriately qualify the findings, or overartension of the authority of these data. Disease Impact Estimatioy as a Health Policy Interveatiog Smoking-attributable disease impact estimates may al3o be used to support regulatory and economic interventions (Sbultz et al., 1986). Economic incentives and disincentives dit•ectly reinforce healtb-related behaviors and Muence the-environmetlL For example, increa= in cigarette excise taxes provide direct economic disincentives to smoking; by repeatedly increasing cigarette prices in excess of inflation rates, the increasing share of disposable income resluired- to-mai$tain-thesmokibg habit may cause smokers to reduce=consumgtion or may reinforce a prior decision to quit. Most importantly, such increases may discourage some adolescents with limited financial reso:uces from-smoking (hcwit, Coate, and Crrossman, 19$1).- Excise tax proceeds-may also provide a funding source for nonsmoking programs. Disease impact - ` estimation has in fact been used in the justification of excise tax legislation (Shultz et aL, 1986). Nonsmoking legislation (tobacco excise tax incre ases, clean air act legislation, and appropriations- for nonsmoking programs) provides an incentive for behavioral change (i.e.; the perception that nonsmoking is endorsed by government as beneficial for its citizens) in addition to the specific provisions of the legislation itseL`. Tbus, -disease impact estimation is an intervention that can influence decision-making by public health professionals formulating a-nonsmoking plan, by legislators considering the merits of nonsmoking legislation, by employers charged with decreasing corporate health expenditures, _ and by-bealtb program managers directing= nonsmohir,g programs (Minnesota Department of I'iealth, 1987). Conceptual Issues for Cost-of-Illness Studies Prevalenee•Based Approach. -Prevalence-based cost-of-illoess (COI) methods estimate tae_ direct and indirect econom:c burden incurred in a period (the base period)- as_ a result of the prevalence of 'dssease_ in the-current year. included are the rosts in the base year or in any time prior to the base year. Prevalence c osts measure the value of resources used or lost during a spzci; ed period, regardless of the time of disease onset. 'Ibe present discounted _ value of future losses due to mortality are also calculated. The conventional methodology attributes future losses to the year in which the death occurs. Most cost-of-diness studies employ this approach, and it is-used here. Human Capital Valuation of Llfe_ Economists use different approaches for valuing human life. One is the human capital approach, refined by Rice, Hodgson, and Kopstein (19&5); the second is the wilingcess-to-pay approach, first proposed by Schelling (1968) and Kishan (1971). Tle human capital approach has been selected for SAN>;:~iEC IL In this approach, an individual's value to society is his or her production potentiaL If markets are functioning well. individuals will be paid a wage equal to the value of the output they produce. Thus, the value 10

of a person to sos-iety- can be measured by his or her earnings, and the economic value of G.fe would then be- the future earnings stream.- This stream of earnings is discounted by using a discount rate that reflects the tradeoff between the value of a dollar today and a dollar tomorrow. op~ The human capital approach is the most commonly used approach for valuing human life (Itice, Hodgson, and ICopstein, 1985). It has the advantage of relying on data that are readdy avai7able. It is relatively easy to apply and is- useful for answering questions about the economic burden of a disease for a specific period (e.g, strokes in 1985) and for analyzang cost-benefit (e.g., determining tho-czst savings of a specffic procedure or intervention program that reduces tllness andlor improves survival rates~ Studies that tue the human capital approach estimate the direct and indirect costs of specific categories ofiZlaesseL - Direct costs are those for which payments are tnade; and indirect costs are those for which resources are losL Estimates of direct costs are-usually straigbtforwarri They include txpenditares for medical care, including hospital and nursing home care, services of medical professionals, drugs, and appliances. The measurement of=indarect costs ipvolves- the estimation of the value of human Ufe, =which raises conceptual anddata -issues. This measurement uses presenF discounted values of -earaings by age and sex - The measure of output loss is earnir3gs; adjusted for wage supplements. This valuation relies on the assumption that earnings reflect productivity. Common practice imputes a value to bousehold- work performed by men and women and adds this value to earnings to - obtain a composite m=e=an present lifetime earnings by age and sex - The human capital approach has some disadvantages Because it values life by using market earnings, it yields very low values for children and the retired elderly. It also undervalues life if labor market imperfections exist. Also, wages do not reflect t.Fue abUities. For example, women and minorities are often paid a lower wage than white men are in comparable jobs. 'Ilus, men are more highly valued than womeh, white pcrsons more than black persons, and middle-aged people more than the young and elderly. In addition, some individuals may-have low productivity as a result of -a particular sllness. Ideally, one would ldce to- adjust earnings for such factors as race-and sex discriminatioa- and W health.- In practice,-this is extretnely difficult to do. Psychosocial costs, such as pain and-suffering,- are -components of the burden of illness omitted from the human capital computation of indirect costs. The human capital methodology does measure an important component of the cost of disease, and it should be evaluated on bow well it does :o. Morbidity destr,oys -labor, a valuable- economic resource, by causing persons to lose time and effectiveness from work and other productive activities, pushing them out of the labor force completely, or bringing about premature death.- Disease thus creates an- undeniable loss to individuals and to society, and it is this loss that the human capital approach attempts to meaazure (Hodgson and Meiners, 1982). 11

Estimation Issues for Cost-of=Dirtess Studies - In principle, COI studies use standard procedures for estimating direct -and iodirect costs. -'Ibe specific-estimating orocedures;-howeyer, vary according to the particular d.isease and tbe- available sources of data. Several issues related to cost estimation are discussed below. These include valuing psycbosocial costs, reduced productivity, household services, earnings, nonmarket use of resources, discount ratet, transfer payments; costs versus charges, and nonhealtb sector costs. Psychosocial Costs. IIlness and disease are rcsponsble for a wide variety of-deteriontions in the quality of life-th.at are frequently referzed- to as psychosocial costs. Victims of illness and - disease, families of victims, and those who render care may all be affected. V'ictims may suffer disfigurement, disability, and the pa~n and grief of impending death. 'bey- and those around them may be forced-`'tnto economic dependence and social isolation, relocation, and other undesired changes ~ life plans ( Hodgson and. Meiners, 1982). Tbe combination of financial -strain and psycbosoc-lal problems can be_esgecially devastating. Some psycbosocial cb3ts, such as tbe- inluence of mortality on-the famt7y and its life cycle can be measured (World HealtF Organization, 1976;-Feichtinger and Hansluwka, 1977). In addition. consequences-of disiewe resulting iii dissolution of carriage, widowhood, and orphanbood- (Preston; 1974), and tbe-impact of changes in residence and loss of jobs ean-be measured. To a large extent, however, tbe-methodology for estimating psychosocial costsis-yrt to be -_ developed. Measures are required for the- impact of sickness on a persoa's sense of well=being, _ and on the well-being- of- his or her family and associates. Indicators must reflect reducrd- self-esteem, emotional problems, pain and suffering caused by loss of body parts, disability, social isolation, economic depcndence, impending death, and otherwise reduced qttaiity of life that often accompanies a di-sease- (Hodgson and Meiners, 1982' ; The difficulty-of quantifying psychosocial costs cause them-to be omitted from COI estimates,Constructing quality -of-life indicators and relating them to measures- of health status are major problems. In additicsn, integrating nonmonetary-informatiot: on quality of life with-dollar estimates for direct abd indirect eeonomic costs is- extremely difl•icult- VaL'dsting Household Services. Marketplace- earnings_ underestimate the loss resulting from women's Llnesse~s because some women are not in-the labor force. Men who are hon;ernatcers- are also not in the labor force. Tfne value of household work must, therefore, be added to earnings. Walker and Gauger (1980) produced the most frequently used estimate of-the v°alue of primary and secondary household production. Tbey z:sed data from-tirne and motion studies of bousekeeper€, multiplied by the relevant market wages- for various services- performed, to - estimate the cost of replacing a housekeeper's time with person-hours from the labor force. Valuation-was done on a task-by-ta-sk-basis. :be value of housekeeping services for women not in the labor force acd- for employed men and women were estimated. More recently, Peskin (1984~ used a somewhat different estimation technique. Za~e Walker and Gauger, Peskin calculated the mean time input for men and women who keep house and 12 ~ ~ ~ b~+ CG #ik

valued the specific tasks by using the pre i.ing wage rate for such tasla.- The -data were-then analyzed by using regression so that-controls for socioeconom-ic and demographic factors could be Qadc. Other studies of the- value of household production have been conducted, but each has its limitations.- Using tbe Walker and Gauger data as a basis, Brody (1975) produced estimates of the value of household production by full-time female homemakers. Brody ignored the household production of men and women engaged in market work. Murphy (1982)-calculated per person annual values of household work, based on the -hours _of work given by survey - respondents, and calculated national-averagas for men and women by controlling for differences between the sample distribution and_ population distribution for age, sM education, and urban_ residence. Howtvei}-Murphy did- not control for labor force participation, marriage, and household size. A recent unpublished review of these and other studies by Kenney (1987) conciuded that the Peskin estimates seem- to be the best available. Earnings. In cost-of-islnes.s studies, the appropriate measure of output loss for individuals is earnings, and the usual-measure-of expected earnings is_the ar:nual-mean earnings by age_and_ sea, adjusted for-wage supplements, such as employer contributions for social insurazl;.e, private pensions, and welfare funds. Rice, Hodge-nn, and Kopstein ;1985) used crors-sectio>3a1 prof•iles of mean earnings by age and sex to estirnate lifetime earnings. In- applying these data, they - assumed that the future pattern of earnings for-an average individual within a sex group will follow_ the pattem rzported--by the Bureau of Census during a base year. This model recognizes that the average individual can expect his or her earnings to increase with age and experience. - Tbe economic assumption behii€d the use- of earnings as a measure of the value of foregone output is_that individuals are paid the value of their marginal product. Because some subgTOUps- are discriminated ag -ainst in employment, actual earnings may be less than the value of -output. Tbus, mortality costs-for diseases that-primatily affect women and- blacks may be under- estimated. -'The indirect costsefor diseases =that affect a-population with above average productivity wil} alsa be underestimated if mean earnings are used to_ measure foregone output. T`ne use of_mean earnings for people who suffer from diseases that affect certain socioeconomic groups may be -incdrrect.- Perhaps it would bc-useful to caiculate human capital ti-alues by orc:upatioa and_ level-of education. Human capital values rrould be more accurate for some_ groups which_could be important, for example, for estimating COI related -to occupational exposure. But for tiiseases-not related to occupation or level of education, values for broadly defined groups, such as men and women at a given age~ may be all that are required. Further, while age, race, and -ses:-can generally -be-deteraiined for- persons with -a given disease (such as cancer), information=on-education and occupation are-not readily available (Hodgson and Meiners, 1982). Nonmarket Use of Resources. Whde- the health-care system can meet some needs of patients with chronic- disz~, -a large share _of the burden of -caring for such patients falls on relatives, friends, and- community volunteers who receive- no reatuneration_ for their essential services. When measuring the amount of resources that society devotes to health and long-term care, we generally confine ourselves to the dollar value of services purchased in the market- place, such as nursing home care and home health services. Tlc size of the informal care

network-can, however, affect the leve: of health expenditures. if individuals become unable or unwilling to devote time and resources to-carring for family and friends, many of the services provided informally might have to be_pnrchased. If the availab>7ity of informal_ caregivers vras_ reduced because of reduced ia~y size or increased participation in the labor €orce by women, we-might welf experience an increase in expenditures for nursing-homes or home health care (Paringer,-1985). Few studies, however, have examined the issues and -estimated the -=ts of informal care services, such as household chores, personal care taslss,- and accompanying the impaired person to the doctor's office.= _ Diseonnt Rates_ The calculation of the present value of expected lifetime earnings taises questions - about discounting and choosing the appropriate discount -rate. From the economist's viewpoint, the arithmetic sum -of lifetime earnings- overstates the present economic value of an individual's earring power. IDeterffiining -the present- value_ of the future earniogs stream is the correct way to mew uae_ eaonoanic-value-over_a period of time; discounting cenveru a aream of earnings into its_ pre3ent value. Economists agree that-compar•ison of streams of earnings over varying tirnespans should employ the process of discounting and that the benefits_ of public projects for which COI- estimates are used should be disoouuted at the social-rate of time prefer-ence.- This rate correctly states society's preference for present-versus future -ccr.sumption.- Unfortunately, -tht social rate of - time-preference is unobservable, and the actual value is uncertain. Hodgson _and-Meiners- (1982) discuss the discount hate in-detaD and recommend that investigators use at least 2,-and preferablY-3, discouac_rates ranging from 2Selp-to 209c. 'Ile higher the discount rate, the lower the present value of sa given stream =of earnings. With a high discount rate, earnings far into the future-yield -a relatively small present value. Conversely, lowering the_ discount rate increases the present value of futu.*e_ earnings. PoGqimakers must know whether cost estimates are appreciably affected by alternative discount rates. -COI estisnates from two studies for the same base period, whether for the same illness or not, can only be meaningfully cgmpared when the same- discount rates are used __ Consamption. _ Some researchers have- questioned whether the- cost of morbidity and mortality due to illness is an individual's output or an individual's output minus his or her consumption (Weisbrod, 1961). Most studies_are concerned with tht COI to society. _'Ibe individual, not just the output be oF she contributes in excess of eonsumption,-is- valued-by-society. Economists today getieraL'y agree that consumption should not be deducted Xisban, 1971). Costs versus Char ges. For measuring Airect-costs, charge data are more frequently used than cost data, despite the fact that charges do not necessanPly reflect resource use. For example, hospitals often charge less than cost for some services (e.g., maternity beds) and substantially more than cost for others (e.g., laboratory tests). Charge data are generally more accessible than cost data; most services have fee schedules (except for services of volunteers, famlily members, and friends). Some institutions (such as hospitals) have cost-to-charge ratios that can be used to approximate costs from charge data, but such a ratio is unavailable for many other services, such as physicians or home health care. 14 Qy

If charge data for some services- are converted to -: osts and others are not, totaf cost -calculation will be inaccurate because of the mixture of data in different units. Factors such as -reimburse- ment methods can-affect the detcrmination-of-costs, as illustrated by the implecnentation of Diagnostic Related-Groups under Medi,:are. - Jv€ost researchers use charge data in cost studies because of its accessi'bilitk and the lack of proven alternatives. Transfer Payments.__ 'Jsing- the human capital method, costs of illness and disease ais the value of reaourcas ;med and resQurcev lost due to morbidity and mor.ality. Direct and indirect costs are losses -that_v+ould not occur if illness and disease were reduceil. Transfers shift control over the use of- resources; they _take _ resourees frota one segment of society and give them to another. Transfers may alter-the allocation of resources among competing ends but-r~rre not a use of resources ia and of the-mseh~es (Hodgson and ?ricinzrs,-1a82). Transfer payments,-such as public aid and disability payments, and-saxea are not costs of illness and disease and- shoold not be added to direct and indirect economic costs. Taxes will already have been counscd in- indirect costs, and transfer payments are smnply a reallocation of income from one individual (e.g., the wage earner) to another (e.g~, the disablcd j. Although these transfers are a cost to the .uage-earner_ in the for-m of a reduction in dispo.sabld income, hiv or her loss is another's gain, and the net cost to 3ociety-in terms- of resources used (and thus, - unavailable for other us----) is zero, except for cosi.; inmirre_d in-opeiating the system that affects the transfers.- Tle addition of transfer payments to direct and indirect costs of Mness would result in double- counting. 15

Chapter 4 Smoking-Attributable Cost-of-fjlness- Studies: Review of the Literature Cost-of-Illness Studies -- Fstimation of smoking-related _econamic costs is _ based on the prevalen-ce_-based methodologies for estimating the cost of illness (COi} lbe-earliest attempts to estimate-national hea3th-care expenses date frore about-1950, and the metbodolog,y-was formalized and upgraded by Pice and _ colleagues tbrough-.multiFple itsrations during the last three decades (Rice,- 1966; CCooper and _ -ttice, 1976; Hodgson and K,op3tein, 1984;-Rice, Hodgson; and iCnpstein, 19&5). - - Cost-cif-Illness GttideUnes COI calculations are aggregated at the level of major -diagraostic categories and include estimates of both direct mea:ca: care costs and indirect costs. - Direct costs are the ~ts af inedicai-care for the prevention and diagnosis of disease and the treatment and rehabilitation of persons with disease. Direct cos;s include personal health expenditures in eight cost centers: hospital care, physicians' services, dentists' services, other professional- services, drugs, eyeglasses and appliances, nursing home care,-and other per3ozFal health care. Direct costs also include support (or nonpersonal) costs for research, public -health astiities, medical faci~.itie s.ities construction, and program administration. Indirect costs result from output lost because of ces.sation or reduction-of productivity due to_ death or disability. Tbe typical measure of indirect costs is lost income. Calculations of -indirect costs typically account for age- and sex-speciific life expectan,:ier patterns of earnings at different ages, labor force participation rates, and the imputed value of housekeeping services. Two types of indirect-aoats are distinguished Indirect mortality costs are the costs of lost income and productivity for persons who die prematurely from t7lnesrs, Indirect morbidity costs are the costs of lost income and productivity for persons who are disabled by di=aease- Systematic COI guidelines were defined by the Pub!ic Health Service Task Force on Cost of fllnes.s Studies (Hodgson and Meiners, 1979). 'Tbe guidelines identify five categories of costs originating from diseases and-otber medical conditions: (1) direct costs of medical care, (2) indirect costs resulting from losses of output due to -morbidity and premature mortality, (3) nonhealtb sector direct and indirect costs, (4) 3ocial costs and decreased quality of life, and (5) rippling effects of cost increases throughout the economy. ibe-consensus developed by-the Task Force indicated that C9I studies should, at a minimum, include direct and indirect-health sector costs. SA-.iNVvMd II software calculates smoking- attributable direct and indirect health -_ sector costL 17 t1~ ~

National Calculations of Economic Costs Attributable to Smoking:- United Swes Early work by Hedrick (1971) estimated smoking-related costs for the United States at SS3 billion, an aggregate figure including direct health-care costs pius morbidity and fire costs. This figure was crudely derived frona-a Canadian study by mult6plying Canadian costs by a factor of 10, tbe-ratio of the respective gross national products. Ibe earliest esti.-aates-of smoking- related costs were critiqued by Luce and Schweitzer (1978)-wbo noted tbe imprecise analytical basis of these figureL Tbe three -estimates -cited by these authors were those of-Soper (1472) of SS.3 billion-(1966 dollars), which included both direct-and indirect cgats and used the Canadian data from Hedrick's study; WMIa.ms -and Justus (1974) of 54.~3 bilfion (1970 dollars) in d.irect- health-care ~ts; and Walker (1974) -of ~11-5 bdlion (1974 dollars, in tiirect hath- care- COts. Luce and Schweitzer calculated tbe-tu'sset of costs attributable to smolr.ing by using worldwide percentages of all° circulatory; neoplastiq and respiratory diseases attributLle to smoking (based on Boden, 1976) and applying 19172 cost estimates to_tbem (Cooper and Rice, 1976). -Adjusted- _ to 1975 dollars, the estimate was S25.9 bi7lion;-this total included $73 billion in direct costs, $123 billion in indirect mortabty costs (the cost of income lost due to prdmaturt death), $5.9 billion in indirect morbidity costs (the cost of income lost due to disability from nonfatal smoking-related disease), and $0.2 billion -in cigarZ tte-ibuited- fire losses. In -a subsequent article- (Luce and Schweitzer, 1978), the -same-miethodology-was used- and inflated to-1976 dolla.z: which produced an -zstimatz of $27,5- billioa.- Woife (1977) ,produced a smoking cost estimate of $-18.9 billion (1976-dollars), a figure that - included- $7.1 billion- in- direct health-care costs, $7.7 billion in indirect mortality costs, and $4.1 billion in indirect morbidity eosts. Kristein (1977) calculated the cost of bea`y-cigarette smoking- (a _pack or more per day) by- using -tvwo strategies. First, using estimates of excess medical use, excess absenteeism, and premature mortality, lr:ristein estimated smoking-related costs at S203 bMom (19?5--dollars); thic-included direct costs of 55.2-b:;lion, indirect mortality costs of $12.0 billion, and indirect morbidity costs of $3.1 billion. He validated this estimate against a separate calculation by- applying smoking-attributable fractions for- respwatory; circulatory, and neoplastic diseases to Cooper's and Rice's (1976) cost=data- to produce an estimate of $20.8 billion. Kristein ard-Grove (197&) translated these large-dol]ar figures into colloquial terms: each cigarette was respoasible-for 135--: enis in direct medical_ -costf- and-3.15 cents in gross national product loss (1978 dollars), the equivalent of 90 cents per pack sold. In the preface to the Surgeon General's landmark report on smoking and health (U.S. Department of-H-ealtl, Education, and Welfare3 1979), former Health and Human Services Secretary Joseph Califano cited -figures for-smolang-related costs at 15 billion to $8 billion in medical care expenditures_and S12 billion to 318 billion in- lost- productivity, lost wases,- and absenteeism. Warner (1983)-inflated the l,uce=and Schweitzer (1977) estimate to 1983 dollars and estimated a total smoking-related cost o€ g49 billion - $15 billion from medical care resourres and $34 billion from productivity losses. -'Ihese figures were placed in context $200 per capita annual social cost of smoking and more than $100 in excess health insurance and-taxe< per working adult. 18-