A pack of cigarettes ranges in price from a low of $3.35 in South Carolina to a high of $6.45 in New Jersey. But the real personal costs of cigarettes — per pack smoked — are 66 times greater (in the case of that smoking South Carolinian).
The analysis can be found in a new working paper for the National Bureau of Economic Research.
W. Kip Viscusi and Joni Hersch calculate this cost in terms of personal health risks: for a man, each pack of cigarettes smoked reduces the value of his life by $222; for a woman, each pack of cigarettes smoked reduces the value of her life by $94.
Why the 200+% discrepancy between the value of a man’s vs. a woman’s life? Because women earn less than men over their lifetimes, and have a lower mortality risk from smoking. (That’s how economists look at the data; Kool-ly, yes, but that’s the cost-benefit calculation).
Viscusi believes that, “The data illustrates that smoking dwarfs almost every other risk people take.” Viscusi is considered one of the gurus of cost-benefit analysis; I studied his work in grad school and refer to this method often in my work.
Viscusi’s book, Smoke-Filled Rooms: A Post-Mortem on the Tobacco Deal, presents the thesis that tobacco is a consumer product about which consumers know the risks of consumption (e.g., greater probability for cancers and pulmonary disease). In the book, Viscusi argues that the tobacco industry should not have settled the lawsuits brought by states. Ultimately, Viscusi asserts, the tobacco settlement was in effect a tax on the poor.
In the most recent Rolling Stone magazine, there is a nine-page ad sponsored by Camel cigarettes clearly targeting the young readers of the publication. It includes the use of cartoons, which were in fact banned from being used in the 1998 tobacco settlement. Rolling Stone is wrapping itself in the first amendment by saying the cartoon is “editorial content.”
The Campaign for Tobacco-Free Kids contends that the cartoons are part of an ad — not “editorial content” — because the nine-page spread begins and ends with the Surgeon General’s warning on the health risks of cigarettes.
In testimony earlier this year to the Congress on the merits of the children’s health insurance program, a long list of health care advocacy groups (including the AARP and the AMA, among 50 others) testified on the public health benefits resulting from higher tobacco costs. “Studies show that every 10 percent increase in the price of cigarettes reduces youth smoking by seven percent and overall cigarette consumption by four percent. Increasing the tobacco tax will also generate hundreds of millions of dollars in health care savings because fewer smokers means fewer people with strokes, heart attacks, cancer, and other smoking-related health conditions.”
Health Populi’s Hot Points: As PJ O’Rourke has written, “Everything that’s fun in life is dangerous. And everything that isn’t fun is dangerous too. It is impossible to be alive and safe.” Whether or not you believe Viscusi on the merits of the tobacco settlement, he’s impossible to ignore on the issue of personal health risks and smoking. The personal costs of a pack of smokes are far greater than the market price, whether the smoker is male or female, adult, child, or adolescent.