Smoking in the United States is implicated in approximately 480,000 deaths each year– about one in five deaths. Cigarette smokers lose an average of about 10 years of life expectancy. According a report by the US Surgeon General in 2020:
Tobacco use remains the number one cause of preventable disease, disability, and death in the United States. Approximately 34 million American adults currently smoke cigarettes, most of them daily smokers. Almost all adult smokers have smoked since adolescence. More than two-thirds of smokers say they want to quit, and thousands try to quit every day. But because the nicotine in cigarettes is highly addictive, most smokers need several attempts to quit for good.
Philip DeCicca, Donald Kenkel and Michael F. Lovenheim summarize the evidence on “The Economics of Tobacco Regulation: A Comprehensive Review” (Economic Literature Review, September 2022, 883-970). Of course, I can’t hope to do their work justice in a blog post, but here are some of the things that caught my eye.
- US tobacco regulatory efforts changed dramatically in the late 1990s, with a huge increase in cigarette taxes and restrictions on smoking.
For example, here is a figure showing the combined federal and state tax rate on cigarettes as a percentage of price (solid line) and price per pack (dotted line). In both cases, a strong increase is visible from about 1996 until 2008.
Also, smoking bans have increased significantly.
Governments around the world have implemented smoking bans sporadically over the past five decades, but they have become much more widespread over the past two decades. … [W]Smoke-free indoor air laws in workplaces, bars and restaurants have become increasingly common. As of 2000, no state had yet enacted a comprehensive smoking ban in these areas, although some states have more targeted bans. From 2000 to 2009, the fraction of the US population covered by smoke-free workplace laws increased from 3% to 54%, and the fraction covered by smoke-free restaurant laws increased from 13% to 63 %… Since the turn of the century, the increase in taxation and regulation of cigarettes and tobacco has been unprecedented and dramatic.
2. Because tobacco use is discouraged in different ways, all at the same time, it is difficult for researchers to sort out the individual effects of, for example, cigarette taxes versus on-site smoking bans working against government-mandated health warnings. in relation to changing levels of social approval.
3. My previous understanding of the conventional wisdom was that the demand for cigarettes from adult smokers was relatively inelastic, while the demand from young smokers was relatively elastic. The underlying belief was that (as a group) adult smokers had a longer smoking habit and had more income, so it was harder for them to kick their smoking habit, while tobacco use young smokers is more malleable. This conventional wisdom may need some tweaking.
The consensus of the last comprehensive review of research that was conducted 20 years ago (Chaloupka and Warner 2000) indicates that adult demand for cigarettes is inelastic.
More recent research from a period of much higher cigarette taxes and lower smoking rates supports this consensus, however, there is also evidence that
methods for estimating the price sensitivity of cigarettes overestimate the price elasticities of
request. Moreover, more recent research casts doubt on the previous consensus that young people
demand from smokers is more price elastic than demand from adults; the most credible studies on
youth smoking indicates little relationship between smoking initiation and cigarette smoking
taxes. The inelastic nature of demand for cigarettes suggests that excise taxes on cigarettes are an effective instrument for generating revenue.
In other words, higher taxes on cigarettes do a decent job of raising revenue, but they do little to discourage smoking.
4) If cigarette taxes are really a matter of revenue collection, as they do little to discourage smoking, then it becomes particularly relevant that lower income people tend to smoke more and therefore end up pay more in taxes on cigarettes. This figure shows cigarette consumption by income group; the following figure shows cigarette taxes paid by income group.
5) Broadly speaking, there are two economic justifications for cigarette taxes. One is what economists call “externalities,” which are the costs that cigarette smokers impose on others, including second-hand smoke and higher health care costs that are shared among health insurance plans. public and private with non-smokers. The other is ‘internalities’, which are the costs that smokers who would like to quit, but find themselves trapped by the addition of nicotine, impose on themselves. The authors write:
However, evidence of the magnitude of the externalities created by smoking does not necessarily support current tax levels. Behavioral wellness economics research suggests that the internal aspects of smoking provide a potentially stronger justification for higher taxes and stricter regulations. But the empirical evidence on the magnitude of the internal effects of smoking is surprisingly thin.
6) Finally, reading the article, I wonder if the United States is, to some extent, substituting marijuana for tobacco cigarettes. As the authors point out, the few detailed research studies on this topic have found no such link. However, in a broader sense, the cigarette smoking trend line is firmly down over time, while the marijuana smoking trend line is up. A recent Gallup poll reports that “[m}orepeopleintheUSarenowsmokingmarijuanathancigarettes”[m}plusdepersonnesauxÉtats-Unisfumentmaintenantdelamarijuanaquedescigarettes »[m}orepeopleintheUSarenowsmokingmarijuanathancigarettes” Evidence of the National Drug Use and Health Surveydoes not more or less confirm this assertion:
Among people aged 12 or older in 2020, 20.7% (or 57.3 million people) consumed tobacco products or used an e-cigarette or other vaping device to vaporize nicotine into the body.
past month. … In 2020, marijuana was the most commonly used illicit drug, with 17.9% of people aged 12 or older (or 49.6 million people) having used it in the past year. The
percentage was highest among young adults aged 18 to 25 (34.5% or 11.6 million people), followed by adults aged 26 or older (16.3% or 35.5 million
people), then by adolescents aged 12 to 17 (10.1% or 2.5 million people).
However, about one-fifth of users of tobacco products did not smoke cigarettes, and with this adjustment, cigarette consumption would be somewhat lower than total marijuana consumption.
For those who would like to know more about the problems related to smoking, here are some previous articles: