Let's subsidize cigarettes, shall we?
My fiancée is right next to me enjoying Megan’s tremendous post on the obesity scare — I feel a special kinship to Peter now that we’re both engaged to freakishly smart and talented econobloggers — and I want to fire off a quick post about something that’s been nagging me for a while.
The justification for taxes on cigarettes is that smokers cost more to the public purse, right? Not because they smell bad, right? They cost more because they get cancer, right?
What if it was the other way around? What if smokers saved the government money? Because we do. We get cancer earlier. We die younger. We cost less in pensions and we even cost less in healthcare. What is so cripplingly damaging to the healthcare system is end of life care for the elderly, right? Postponing the inevitable by a couple months, right? End of life care is much cheaper for a 60 year old with untreatable cancer, whom you just put on a morphine drip, than it is for an 85 year old with about eleven different conditions.
So perhaps the ObamaCare plan or other healthcare systems around the world should create a cigarette subsidy to save money! Public service announcements explaining that the cool kids smoke! (Well, maybe not, that would drive the kids away.) If the purpose of a Pigovian tax truly is to reduce negative externalities, should we not go even further and tax gyms, and subsidize transfats?
It’s the right thing to do.
Look, just to be clear: this post is tongue in cheek obviously, but it hints at a real problem with Pigovian taxes and purely utilitarian public policy more generally.
The real reason we have tons of taxes on cigarettes is because 1- it’s politically expedient to raise taxes on a minority and 2- most people think “Ick, gross!” The negative externality argument is used to retrospectively justify a sin tax applied for moral, not economic reasons.
But this creates a pitfall: facts, as a great thinker once said, are stubborn. If your negative externality is actually a positive externality, the mask of your oh-so-utilitarian, oh-so-rational policy falls.
One of the reasons I don’t think of myself as a libertarian even though they’re the group whose actual policy preferences most closely mirror mine is because of things like this. Legislation reflects a society’s moral values. In fact, it should reflect a society’s moral values, consistent with individual freedoms, because it is what a democratic polis is all about: a nation deciding by which rules it wants to live.
Government can’t and won’t “just get out of our lives”, simply because what you describe as “getting out of our lives” isn’t the same thing as what I describe as “getting out of our lives”, and, until Jim Manzi finally succeeds at creating evidence-based social science, there is no scientific way to decide what government should or should not do — and nor should there be.
So if you want to disincentivize smoking through sin taxes, that’s perfectly fine. It’s okay to have public policy that disincentivizes bad things just because they’re bad, without having to make budget projections over the next 30 years. I’m willing to pay extra to feed my addiction. But don’t lie about the real reason you’re doing it.
And remember, next time you see me light up — I’m doing my part to save healthcare and pensions.
Wait wait wait …. that comes from Lenin?! Actually, here’s a stubborn fact (quoting Bartlett’s):
“Facts are stubborn things; and whatever may be our wishes, our inclinations, or the dictates of our passions, they cannot offer the state of facts and evidence.” (John Adams, Argument in Defense of the Soldiers in the Boston Massacre trials, December 1770)
Apparently he lifted the observation from Gil Blas (Book X, chapter 1).
[By the way, I’d like to point out (not that anyone cares, but for the record) that another occasional commenter here also signs his name Paul, but in his case I think it’s usually lower-cased. I’m not the same person.]
— Paul · Jul 30, 09:26 AM · #
It’s been attributed to many people, including Adams and Twain. I’m fully willing to believe Adams was the first recorded to use it but it was a catchphrase of Lenin’s as well.
— PEG · Jul 30, 09:31 AM · #
Even if it had been established that on balance, smoking saves the government money — it costs the government some money, and it saves some money, but I’m not sure that it’s been established that on net it saves money — there are lots of deadweight costs to society that don’t directly cost the government money. If a highly educated and well trained person is forced to retire or dies in their 50s as a result of preventable disease, that’s a deadweight loss to society that’s properly addressed with a Pigovian tax.
— alkali · Jul 30, 12:37 PM · #
“End of life care is much cheaper for a 60 year old with untreatable cancer, whom you just put on a morphine drip, than it is for an 85 year old with about eleven different conditions.”
I believe this is factually incorrect. Those who live longer cost less when they die — it is more expensive to care for a dying 60-year-old than a dying 85-year-old.
Also, those who die sooner contribute less. They have fewer productive years, pay less taxes, spend less on post-retirement cruises and vacations, volunteer fewer hours at churches and other civic institutions, etc.
There are also other less tangible ways that society can benefit from its older members. There are benefits to families of extended multi-generational continuity, for instance, and when families benefit society benefits.
Bottom line, society is impoverished when its members die young. It is an outcome that should be discouraged.
— SDG · Jul 30, 01:12 PM · #
1) I like references to fellow Old Harrovian, Arthur Cecil Pigou.
2) (And on a more serious note)I was under the impression that cigarette taxes were motivated by two other things: that the government, for whatever reason, and in conflict with traditional American mores, views protecting me from myself as its responsibility; the other motivation is that they can. It’s free money due to demand inelasticity. My calculus:
Political viability + demand inelasticity = Over $6 a pack in my beloved tobaccy state of Ol’ Virginny.
— Christian L. · Jul 30, 02:57 PM · #
So should we start taxing high school sports, since they put students’ lives and health at risk? (I seem to recall that cheerleading is among the worst offenders.) Or maybe we should tax people who cross the street, because you never know when you might get hit by a bus, as well as hikers who expose themselves to possible bear attacks. Hell, let’s just pay people to stay at home surrounded by pillows and marshmallows!
— John Schwenkler · Jul 30, 03:17 PM · #
Tremendously stupid, I think you mean. From top to bottom Megan’s post is a tissue of fantasy. Is there a single thing she says in the post that is actually true?
— Chet · Jul 30, 03:35 PM · #
This post is very Lewis Lapham, minus his conspicuous erudition.
— turnbuckle · Jul 30, 03:39 PM · #
“So should we start taxing high school sports, since they put students’ lives and health at risk? (I seem to recall that cheerleading is among the worst offenders.) Or maybe we should tax people who cross the street, because you never know when you might get hit by a bus, as well as hikers who expose themselves to possible bear attacks. Hell, let’s just pay people to stay at home surrounded by pillows and marshmallows!”
The fallacy common to all your false analogies, not implied in my comments, is that whatever eliminates risk, regardless of other consequences, must be good and worth pursuing.
A world without cigarette smoking would per se be a healthier and better world. A world in which people stayed at home surrounded by pillows and marshmallows would not.
Sports is a fundamentally healthy and positive enterprise that does carry certain risks. Cigarette smoking is not a “risk,” it is a harmful activity. Virtually everyone who smokes cigarettes and lives long enough suffers for it. A great many people engage in high school sports and fundamentally benefit from the experience.
— SDG · Jul 30, 03:42 PM · #
Just because facts are stubborn things doesn’t mean you can’t use them. Your argument would be a little more forceful if you actually used facts to support it rather than assertions.
— Steven Donegal · Jul 30, 03:56 PM · #
Show me the data, please. I’d bet in reality the consequences of catastrophic injuries, not to mention the long-term effects of the pounding on one’s knees, shoulders, etc., make many competitive sports a net negative when it comes to physical health. Maybe we should only allow people to run on treadmills and ride stationary bikes?
That is similarly untrue.
So do a great many smokers.
Note that, like PEG, I have no problem with moral argumentation aimed at showing that sports are a noble activity while cigarette smoking is not. The only point here is that those arguments have to have premises referring to things other than dollar figures.
— John Schwenkler · Jul 30, 03:56 PM · #
Like alkali and SGD point out, there’s a lot of different financial effects smoking could have. One obvious possibility is decreased workplace productivity. It takes some sophistication to measure and balance those effects—healthcare savings could be huge, or trivial, or there could be increased costs. And there are conflicting studies on the subject. We get no hint that there’s even a real question in this post.
Perhaps this is just presentation, Pascal—you’ve carefully considered the points you rushed past just now. But your post sure doesn’t sound like you have.
— Justin · Jul 30, 05:21 PM · #
“Show me the data, please.”
No, you show me the data. Activities — in this case high school sports — are not presumed guilty until proved innocent. It seems likely that if there were really evidence to indicate that they were a net negative, they would be more controversial and less widely accepted. But feel free to produce whatever evidence you may have.
“That is similarly untrue … So do a great many smokers.”
You suspect that many sports are a net negative physically, but you doubt that cigarette smoking is a physical negative for nearly every smoker who lives long enough?
(Caveats: By “smoker” of course I understand a person who smokes consistently over a sufficient percentage of their life; someone who smokes for ten years and then quits may not suffer long term effects. I also assume a typical level of cigarette consumption; very few cigarette smokers smoke only one cigarette per day, for instance. This is in contrast to, e.g., pipe or cigar smokers, who are more likely to have a merely occasional habit and are thus less likely to suffer ill effects.)
Be that as it may, evidence on cigarette smoking as a net negative for most long-term smokers is pretty widely available.
“Note that, like PEG, I have no problem with moral argumentation aimed at showing that sports are a noble activity while cigarette smoking is not. The only point here is that those arguments have to have premises referring to things other than dollar figures.”
Since I never pegged my argument to a dollar bottom line and in fact explicitly cited other factors, this point would seem to be addressed to someone other than me.
— SDG · Jul 30, 05:30 PM · #
Certainly some high-school sports are more dangerous than others, no? Can we at least start taxing the most dangerous 25% in order to induce people to move into safer sports?
— J Mann · Jul 30, 05:33 PM · #
Okay.
“The total amount of sick leave compensated for sports injuries (3,477 days) was 1.2% of all days compensated in 1984. The overall mean cost per injury was US$ 335.” (link)
“The total direct medical cost extrapolated for the Flemish sports participants was 15,027,423 euro, which amounted to 0.07% to 0.08% of the total budget spent on health care. The indirect cost extrapolated for the Flemish sports participants was 111,420,813 euro, which is about 3.4% of the costs arising from absenteeism from work.” (link)
“Drowning is the second leading cause of injury death among children ages 1 to 14 and kills more than 4,000 Americans annually. More than 10,000 people receive treatment in the nation’s emergency departments (ED) each day for injuries sustained in SRE activities. At least one of every five ED visits for an injury results from participation in sports or recreation. In 1999, Americans made an estimated 1.5 million ED visits for injuries sustained while playing basketball, baseball, softball, football, or soccer. Approximately 715,000 sports and recreation injuries occur each year in school settings alone. Injuries are also a leading reason people stop participating in potentially beneficial physical activity.” (link)
Those strike me as significant negative externalities. By your logic, shouldn’t we be subsidizing those physical activities that have a high benefit-to-cost ratio, and taxing the ones that don’t? (Cheerleading, by the way, looks to be among the worst.)
Yes, I absolutely do, especially if you count the good feelings that smoking can give rise to as a physical positive.
In that case, you weren’t disagreeing with PEG.
— John Schwenkler · Jul 30, 05:49 PM · #
Note that, like PEG, I have no problem with moral argumentation aimed at showing that sports are a noble activity while cigarette smoking is not. The only point here is that those arguments have to have premises referring to things other than dollar figures.
We know that 50% of the cost of lung cancer comes from smoking, and about 10% of heart disease, stroke, etc. I can’t find quick statistics, but I’m pretty sure lung = $9bn and heart/stroke ~ $400bn, so let’s just say $40bn is the yearly cost to society from smoking.
Can we get an estimate of the negative costs of high school sports that gets within 50% of that ($20bn/year)?
Smoking isn’t just about lung cancer – it makes everything else worse. PEG I’d like to see evidence of your initial assertion – “We get cancer earlier. We die younger. We cost less in pensions and we even cost less in healthcare” because I do not believe it is true. Especially when you factor in the role of smoking in increasing heart diseases – incredibly expensive.
— Rortybomb · Jul 30, 05:50 PM · #
John looking at that, you have to consider all leisure activities by all adolescence in America and you are going to get to about, what, $25bn?
Now imagine 1 thing, say wearing a helmet, accounts for a huge chunk of that, a cost that increases (insurance) costs for everyone. Wouldn’t a no-helmet tax be a priority?
— Rortybomb · Jul 30, 05:57 PM · #
But this doesn’t factor in any of the activity’s upsides, such as the great deal of economic activity that it sustains.
PEG is right – Ron Bailey and Jacob Sullum (I think) have written a ton about this at Hit & Run.
— John Schwenkler · Jul 30, 06:01 PM · #
PEG is right – Ron Bailey and Jacob Sullum (I think) have written a ton about this at Hit & Run.
Interesting. I’m having trouble digging a link, if someone could provide one.
That has to be impossible to control for, since smokers are at increased health risks for everything. Dementia!
— Rortybomb · Jul 30, 06:09 PM · #
Here’s one.
— John Schwenkler · Jul 30, 06:16 PM · #
And here’s another.
— John Schwenkler · Jul 30, 06:17 PM · #
“Those strike me as significant negative externalities.”
Sure, but absolute numbers don’t tell us much about net negatives or positives. How many people who weren’t injured — or even who were — would be less healthy without the physical (and emotional) payoffs of sports? Cost-benefit analysis of sports and health is complicated; cost-benefit analysis of smoking and health, a lot less so.
“By your logic, shouldn’t we be subsidizing those physical activities that have a high benefit-to-cost ratio, and taxing the ones that don’t?”
Help me out, what logic is that?
“Yes, I absolutely do, especially if you count the good feelings that smoking can give rise to as a physical positive.”
I doubt it. I think for addicts the “good feelings” soon devolve (largely) into the absence of crappy withdrawal feelings. The cost in shortness of breath and other physical consequences more than makes a physical negative. Being able to walk up a few flights of stairs or get what a good Chardonnay really tastes like is a wholesome high that few can appreciate quite like an ex-smoker.
“In that case, you weren’t disagreeing with PEG.”
My bottom line point that society is impoverished when its members die young. It’s a point I thought worth making in the present context. How PEG feels about it is a question I leave to him.
— SDG · Jul 30, 06:24 PM · #
That’s about obesity. This links to this 1997 study that makes PEG’s argument. I’m still dubious. There’s been a lot of effort and money spent on trying to keep dying smokers alive, and the technology is improving since 1997. I can’t see the study, so I wonder if they get strokes, heart attacks, housing those with dementia, etc. I’d like to see that study again knowing what we know now.
Remember on the medium timeline, the lifespan of smokers who would have previous died converges to non-smokers as we come up with more medical gadgets to put into their bodies to keep them alive, and those gadgets will be very expensive.
— Rortybomb · Jul 30, 06:24 PM · #
Good question. But what are you going to say if the answer turns out otherwise than you hope?
The logic that says that all things due to which “society is impoverished” deserve to be penalized in the tax code.
— John Schwenkler · Jul 30, 06:29 PM · #
I’m too out of it to decide if a link dump is helpful, but I’ll default to doing it.
An older reason article, http://www.reason.com/news/show/117651.html and the paper that it references: http://scholar.google.com/scholar?q=%22Cigarette+Taxation+and+the+Social+Consequences+of+Smoking%2C%22&hl=en&btnG=Search
Here’s one by Jacob Sullum: http://www.reason.com/blog/show/124821.html
Too tired to try and find more, but that’s a start. Note that none of this work seems to address issues of workplace productivity.
Here’s another article I stumbled upon (vouched for by no one) http://content.nejm.org/cgi/content/full/337/15/1052 (paywalled, heavily cited) http://content.nejm.org/cgi/content/extract/338/7/470 (criticism, paywalled).
— Justin · Jul 30, 06:34 PM · #
“Good question. But what are you going to say if the answer turns out otherwise than you hope?”
I dunno. Depending how “otherwise” it is, maybe something like “No, son, you can’t go out for football” might be in order.
“The logic that says that all things due to which ‘society is impoverished’ deserve to be penalized in the tax code.”
When did I say that? You will search my posts in vain for this logic.
Maybe I can save you a step: Once again, my bottom line contention is that society is impoverished when its members die young, and that this outcome should be discouraged, not encouraged. How it should be discouraged, particularly in relation to specific behaviors like smoking — along with what, how, why and even whether anything in the world should or should not be taxed or subsidized — are subjects I have not directly addressed (although you could reasonably infer that I would be against subsidizing cigarettes).
(Note: If you tell me again that I wasn’t disagreeing with PEG, you’ll get the same response.)
— SDG · Jul 30, 06:49 PM · #
Check out the passage quoted just below – so long as we read the “and” as an implicit “and so”, that’s exactly the logic it assumes.
Again, this isn’t in question; or rather, the dispute is over how we need to measure “impoverishment” in order for the inference to be a sound one: if all you have in mind is that health care costs are a negative externality and early death reduces economic productivity, then you’ll have to deal with the fact that (1) smokers and obese people may end up using less health care than non-smokers and thin people simply because they die sooner, and (2) while these people do die early, they likely tend to die when their economically productive years would be over anyway. Plus, you’ll have to worry about the argument generalizing to things like athletic activities. And so PEG’s conclusion – and mine – is that moral values are needed to argue for paternalism; mere appeal to costs and benefits isn’t enough. If you don’t disagree with this, great!
— John Schwenkler · Jul 30, 07:05 PM · #
“Check out the passage quoted just below – so long as we read the “and” as an implicit “and so”, that’s exactly the logic it assumes.”
No, it doesn’t. You need to read more carefully. I tried to save you a step, but I guess it didn’t take. Please re-read the comments above expounding on what my bottom line contention does and doesn’t say.
“And so PEG’s conclusion – and mine – is that moral values are needed to argue for paternalism; mere appeal to costs and benefits isn’t enough.”
I would go further than that: Moral values are needed to argue for any practical proposal of any kind, even appeals to costs and benefits. As soon as you label an outcome a “benefit,” you’ve made a moral judgment. How widely shared that judgment may be doesn’t obviate the point.
— SDG · Jul 30, 07:20 PM · #
I read your post while smoking a cigarette. Though I do want to quit since I have issues with dying a horrible lung-cancer induced death. But just not yet!
— JB · Jul 30, 08:30 PM · #
As great as Megan is, she has done herself a disservice by giving so much uncontested pixel space to Mr. Campos. He is wayyy out of the mainstream, and not in a subjective area like politics or morality. There is ample evidence – physical, objective, statistical evidence – that obesity is causally related to poor health outcomes.
The “obesity as moral myth” camp sounds like nothing more than conspiracy theorists. It reminds me of vaccine denialists.
There is such a thing as being contrarian to the point of stupidity.
— Ryan · Jul 31, 02:13 AM · #
This comment thread is amazing and I feel both proud and ashamed to have been mostly a spectator.
Thanks a lot John for responding on my behalf, much better than I could have. I’ll try to respond to everyone, but before that I must get lunch (and a smoke).
— PEG · Jul 31, 11:10 AM · #
I think we should punitively tax toothpaste, toilet paper, deodorant and laundromats, just to see what happens. For instance, would poor people have less sex? I’m guessing not!
— Kristoffer V. Sargent · Jul 31, 03:46 PM · #
First they came for the smoker, and I didn’t care ‘cause I don’t smoke!
Then they came for the fat people and I didn’t care ‘cause I’m skinny!
Then they came for the people over 62….and I screamed like a little girl!
— Bob Cheeks · Jul 31, 09:52 PM · #
Actually, John’s done my work for me better than I could have so I think I’ll just sit this one out.
— PEG · Aug 1, 12:24 PM · #
Nothing in this thread that I can see constitutes a response to the point that heavy smokers have lower workplace productivity.
And frankly, pointing to the reason archives isn’t very convincing, when there’s a mixed literature on the subject, some papers arguing that smoking increases health costs, others that it decreases them. The reason archives don’t, as far as I can see, even so much as mention contrary studies. That’s not the mark of a responsible publication.
Can you assert to us, that on balance, the literature supports your position, and that the topic has been studied with adequate care? If not, I think you have some obligation to make that clear to us, as readers.
— Justin · Aug 3, 04:18 AM · #