This thread digressed a bit into the ‘externalities’ of cigarette smoking, and the notion that we all pay for the cost of cigarette-smoking related health issues, therefore we have a right to restrict smoking.
Rather than continue to hijack that thread, I thought I’d start a new one. What exactly is the evidence that cigarette smoking costs society money? Forget the arguments about children losing their parents, etc. I want to talk strictly finances. Does cigarette smoking cost the government money?
I’ve seen studies that indicate it does, but these studies invariably seem to consider only the costs of smoking-related medical treatments, and don’t factor in the additional costs to society if people stop smoking, and therefore live longer while drawing Social Security and using medicare to pay for untold age-related illnesses.
I found one study by the admittedly-biased taxfoundation.org which attempts to quantify some of this. They even account for the fact that age-related illnesses occur later, and therefore have to be discounted. Their conclusion was that for the historical average discount rate of 3% or less, there is a net wealth transfer from smokers to non-smokers, before cigarette taxes are included in the mix. Primarily because a good percentage of people who die from cigarette smoking pay their own medical bills either directly or through private insurance, while people who live into old age are primarily state supported. So if you pay your own medical bills, then die before retirement, the state gets to keep all that SS and save all those medicare bills, and therefore benefits from you having smoked.
A 1994 study concluded that if you include the excise taxes on cigarettes, there was a net wealth transfer from smokers to non-smokers of between 17 and 24 billion dollars. This would suggest that smoking is actually a positive externality on society.
Another study looking at state finances concluded that states actually gain 2.1 billion dollars a year before excise taxes are considered, and if you include taxes states benefit from smokers to the tune of about 10 billion a year.
Another study, funded by Phillip Morris (another admittedly biased source) on behalf of the Czech government, found that the net financial result of smoking resulted in savings for the state. This was the basic breakdown:
In addition, every study I’ve seen, including this one, counts ‘lost income tax’ as a cost of smoking. Is that really fair? If so, shouldn’t people be taxed for quitting their jobs or taking early retirement?
My position is that at best, the costs of smoking to society are hard to determine and it’s by no means a given that there is a net burden to society - especially if you don’t include things like lost income tax. And therefore, other than second-hand smoke concerns, the state should have no interest in restricting or taxing the private smoking habits of people.