Thoughts on Smoking

If you want to commit suicide, but not yet, you could do a lot worse than begin smoking. With a few special exceptions, smoking is the worst thing you can do to yourself. Indeed, it's often been said, cigarettes are the only legally available product that when used as directed will kill the user and injure others.

Unsurprisingly, the economic costs of smoking are vast. The premature deaths, ill health and lost productivity that cigarettes cause quickly becomes a very large number in dollar terms. In 2005, the last year that figures are available, smoking cost Australia $31.5 billion. That's about $1500 for every single person in the country, or about 2/3 of the federal government's total health budget of $45 billion.

So, anything that reduces the number of cigarettes people smoke has to be good for the country. Governments invest in helping people quit through information campaigns and telephone helplines, they raise taxes on tobacco (providing a win-win as far as Treasury's concerned) and they have progressively introduced bans on where people can smoke. Let's take them one at a time.

There's evidence that telephone helplines, especially when advertised in mass media, do have an impact. Counselling seems to be better than no counselling. But the small-government, low taxation, libertarian think-tank, the Centre for Independent Studies says it's a myth that higher spending on preventive medicine will reduce health costs in the future.

Actually, the researcher who argued this, Jeremy Sammut came into the studio and when I put the example of smoking to him, he qualified. Essentially he believes that public information campaigns don't work by themselves, but that smoking has been reduced with a multi-pronged approach of increased taxes (and thus increased prices) and bans.

But it turns out to be more interesting than that, because smokers, like all addicts, are making rational choices. This idea, of a rational addict, seems bleeding obvious but it was a revolutionary insight 20 years ago when first put forward by two Chicago economists, Gary Becker & Kevin Murphy.

If you're addicted to cigarettes and you know the tax on tobacco is about to increase, you have a powerful incentive to quit. In fact, you really have an incentive to quit now, before the tax increases. Building on their initial research, this is exactly what Becker and Murphy found - more smokers began trying to quit after tax increases were announced but before they came in.

But what if you can't quit, or you didn't realise the price was going up? Then you have to pay more for each cigarette. As a rational smoker, not able to quit, you have a choice - you can wear the price rise and pay more, or you can smoke fewer cigarettes. Which do you choose?

It turns out that you smoke fewer but smoke harder. You suck it down to your toes. Not only that, you don't leave the ciggy lying around in the ashtray, you get it into you - after all, it's costing you a fortune. Francesca Cornaglia, who's at Queen Mary College and LSE, (and a colleague, Jérôme Adda) worked this out in a rather elegant way. They measured the levels of cotinine (a by-product of the body breaking down nicotine) in smokers who reported buying fewer cigarettes. Essentially it stayed constant.

The only way to pull that off is take more and deeper drags of each cigarette. Unfortunately the filters in cigarettes become less efficient as they're used - they're clogging up with gunk. So in the second half of a cigarette, more of that gunk is getting into the smoker's lungs. The gunk is not made of antioxidants and omega III, it's a cocktail of enormously toxic chemicals. You really don't want more of this stuff going into your body. All of which means that increasing taxes will result in some smokers using cigarettes in a more unhealthy way!

That's one unintended consequence of well-meaning public policy. Now Cornaglia and Adda have found another - this time it's connected to smoking bans. You can't smoke on public transport, in schools or shopping malls, or inside workplaces. You can't smoke at the cinema or restaurants either, or - increasingly - in pubs and clubs. So what's a rational smoker to do?

The answer depends on how easy it is to substitute the public space for a private one. Schools and shopping malls don't have a private equivalent. Neither do most workplaces. But the cinema does, so do restaurants and pubs. They're all to be found under one roof - the home.

The two London-based economists found that a ban on smoking where there's a private alternative (the home) drives up smoking in that place. So if you stop people smoking in pubs or cinemas, they simply drink at home and watch DVDs. The effect of this is to create two classes of people, neither of whom smoke: winners and losers.

The winners are everyone who can now go to restaurants and pubs without breathing other people's smoke. This is really important for the health of the people who work in these places - they become big winners. The losers are literally close to home - they're inside with the smokers - the smokers' children and other relatives.
Which means that some smoking bans will mean more secondary smoke for children of smokers. Once again, not something the policy framers will have been trying to achieve.