Economy & Budget

Economics and Smoking

The most fundamental principle of economics is the law of demand, which postulates that the higher the cost of a behavior, the less people will do of it, while the lower the cost, the more people will do of it. The law of demand applies to any behavior, and I’m going to apply it to anti-smoking behavior. First, let’s get the health issue out of the way because it has no relevancy to the particular principle under examination, which is how people respond to the cost of something.

The cost to nonsmokers to impose their will on smokers, say, in a restaurant, bar or airplane, is zero, or close to it. They just have to get the legislature to do their bidding. When the cost of something is zero, there’s a tendency for people to take too much of it. You say, "Williams, in my book, there can never be too much smoke-free air!" Here’s a little test. Say your car’s out of gas and stuck in a blizzard. You wave me down for assistance. I say, "I’ll be glad to give you a lift to safety, but I’m smoking in my car." How likely is it that you’ll turn down my assistance in an effort to avoid tobacco smoke? You might be tempted to argue, "That’s different." It’s not different at all. The cost of a smoke-free environment is not what you’re willing to pay.

Say you don’t permit smoking in your house. When I visit, I offer to pay you $100 for each cigarette you permit me to smoke. Instantaneously, I’ve raised the cost of your maintaining a smoke-free environment. Retaining smoke-free air in your home costs the sacrifice of $100. Of course, I could offer you higher amounts, and economic theory predicts that at some price, you’ll conclude your 100 percent smoke-free air isn’t worth it.

Air that’s either 100 percent smoke-filled or 100 percent smoke-free is probably sub-optimal. At zero prices there will either be too much smoking or too little smoking. The problem in our society is that laws have created too much smoke-free air. To a large degree, it’s the fault of smokers, who haven’t created a cost to smoke-free air.

You say, "What do you mean, Williams?" Here’s an example: A number of years ago, a congressman (who shall remain nameless) invited me to give a lecture to some staffers. I asked him if it was OK for me to smoke during my lecture, whereupon he told me about Congress’ no-smoking rule. I told him that if I weren’t allowed to smoke, I wouldn’t give the lecture. The congressman promised he’d tell the guard that I could smoke, and I gave the lecture. There have been other occasions where I’ve attached a price to smoke-free air. I fully recognize that people and organizations have their rules, but I also have mine.

My rule is by no means absolute. There are instances where I put up with zero-priced smoke-free air, and there are other instances where I don’t. It all depends on the cost to me. I think other smokers ought to adopt the same agenda. Say you’re asked to do some volunteer work. You might answer, "Yes, if I’m allowed to smoke." This strategy might also be a nice way to get out of doing something without saying no. Just ask whether smoking is permitted.

The economic lesson to extract from all of this is that zero prices lead to sub-optimal outcomes, and it doesn’t just apply to the smoking issue. How would you like zero prices at the supermarket or clothing store? If there were, what do you think you’d see on the shelves when you arrived? If you said, "Nothing, because people would take too much," go to the head of the class.

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