Tobacco Documents Online

EXECUTIVE SUMMARY OF SMOKING AND THE STATE Tobacco products are among the most highly taxed and strictly regulated products in America. The economic penalties imposed upon these products are justified by anti-smoking advocates by the supposed costs to society that result from the claimed health effects of cigarette use. These costs are known as "social costs". But to the extent that any costs associated with smoking exist, these costs actually are "private costs" -- costs borne by the individual rather than society. This is the critical finding of a new book, Smokina and the State, written by Professors Robert Tollison and Richard Wagner of the Center for Public Choice at George Mason University. Wagner and Tollison conclude that there is no convincing basis for the claim that any economic costs of smoking are imposed on nonsmokers. Nor, the authors say, do smokers impose an uncompensated cost on nonsmokers from the claimed consequences of environmental tobacco smoke. Social Costs: The Basis_ for Policy_Making For 20 years, successive Surgeons General have waged war on smoking. Surgeon General C. Everett Koop has announced his desire for a smoke-free society. Federal and private agencies have joined his crusade, some citing large monetary costs attributable to diseases that have been associated with smoking. The assumptions have had tangible policy results. Taxes, some of them based on the social cost arguments, raise the price of cigarettes by about 50 percent in this country. Every year even higher taxes are considered both to raise revenues and to discourage use of tobacco products. Nonsmokers claim they are bearing part of the increased health-care costs due to smoking, and lobby for higher taxes that would directly fund Medicare or other health-care programs. Public smoking restrictions result in part from claims of a social cost attributed to the impact of environmental tobacco smoke on

nonsmokers. Efforts to restrict smoking in public places and in the workplace have become more and more common. The To(lison and Wagner analysis contradicts these essential social costs arguments and, thereby, indicates the unfairness of policies which are rooted in the social costs assumptions. The "Cost" of Smoking: Who's Payina What Anti-smoking activists consider lost productivity and presumably higher rates of sickness and absenteeism as part of the social cost of smoking. Even if these claims were correct, Tollison and Wagner note, any cost of smoking would be borne by the smoker in terms of lost pay, job status, promotion, etc. Further, any medical costs that would be incurred by smokers are not "joint" costs - costs paid for by smokers and nonsmokers - they are costs paid solely by the smoker. Obviously, any medical costs incurred by a smoker that he or she pays directly could not be a burden on nonsmokers. But even when an insurance company picks up much of the cost of medical care, there *are increased' premiums charged to smokers which are not charged to nonsmokers. Similarly, Tollison and Wagner note, there is no substantive basis for claiming that smokers place an above-average demand on Medicare. Even if smokers were to make greater use of subsidized care than nonsmokers, the existence of subsidized' care does not give smokers an incentive to smoke more or to oet sick. The External "Costs" of Environmental Tobacco Smoke In recent years, a new line of argument has emerged in support of restrictions on tobacco use: Smokers generate environmental tobacco smoke (ETS) and thus expose nonsmokers to adverse health risks. Even if this claim could be scientifically proven -- and it has not -- Tollison and Wagner find that there are more external costs resulting from blanket anti-smoking policies than any that might be attributed to ETS. Owners of public facilities such as restaurants and hotels have an economic incentive to provide the kind of

environment customers want. Employers deciding the merits of workplace ,smoking regulations are hiring in a competitive labor market; companies will thus provide the type of workplace most attractive to the majority of workers. Legislative bans on smoking result in more economic inefficiencies and social costs than letting the marketplace do its job, the authors say. SummaCy: Public Policy Results The language of social costs often serves political, rather than economic, ends. Because they are not based on substantive data, social costs are analytical "unicorns" that should not be used' to establish real world policies. Even if a third-party cost could be assessed, the effort to eliminate it would often cost more than it would save. This is certainly true of the government's attitude toward tobacco prod'ucts, Tollison and Wagner say. Smoking and the State concludes that tobacco taxation is not a product of economic analysis; it is a result of upper-class fashion- mongering and politicians seeking painless ways to increase revenues. The patronizing •anti-tobacco policies of the 1980's bode ill for the traditional individualism of American life, the authors say. When government has the power to "protect" people from themselves, there is no guarantee that it will stop with smoking. If government is allowed to enact punitive or costly measures that arbitrarily restrict the liberties of smokers, where will this coercive use of power end?