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The economics of smoking
Book and article
Apart from their debatability, scientific territories have always to be highlighted. Universitt
Robert D. Tollison and Richard (Kluwer Academic Publishers, xi + 253, ISBN O-7923-9224-8.
reviews
explorations
de Paris
661
of the
most
virgin
Jean-Dominique Lafay I-Pantheon-Sorbonne Paris, France
E. Wagner, The Economics Boston-Dordrecht-London,
of Smoking 1992) pp.
I like pipes, I like cigars. My friend George dislikes both. So I do not smoke when he is around and he does not shun my company. We owe this to each other as friends. But for the rest of the world I do not care, that is to say, I smoke whenever I like and I feel myself in accord with the economy. Robert Tollison and Richard Wagner have proved that. What they essentially attempt to show is that smoking does, contrary to a widespread belief, not give rise to inefficiency of an economy. That is to say, generally speaking smokers (cigarette smokers in particular) bore the cost of smoking already before the extensive anti-tobacco campaign was initiated, which still is going on. So, in principle there is no need for further government intervention. Consequently the question can be raised, why government policies toward smoking are performed. Applying the economic theory of interest groups, an approach which is embedded in the broader framework of public choice, the authors conclude that the government came under the influence of powerful interest groups. Thus, it is not the intention to cut overconsumption of tobacco in the spirit of the well known ‘merit-goods’-type of government activities, but rather to create redistributional effects. Smokers could suffer from smaller wages or even from less job opportunities. This is so because for example smaller firms in particular could not afford the provision of smoking sections in recreational areas. Therefore they prefer to employ non-smokers only. Also, small restaurants could get in trouble, since they cannot provide smokingand non-smoking areas simultaneously as easily as larger establishments. In the course of their analysis the authors claim to unmask many beliefs about detrimental allocational consequences of smoking as mistaken. Neither is the cost of health care unduly increased because of smoking, nor is the overall productivity of the economy affected. These are by far not all of the rather surprising findings. Even if one doubts these unexpected results, the book is worth reading because of the way in which the arguments are developed. Some parts take the form of critical appraisals of the stock of knowledge in issues in public finance. One fine example is the paragraph on the difference between
662
Book
and article
reviews
transfers and social costs (p. 94) which reveals the excellent craftsmanship of the authors. As becomes apparent from the concluding chapter of the book, one goal of the authors is to challenge the interference of governments with the private sphere of the citizens at large. There is definitely some truth in the claim that governments tend to be busybodies, thus not primarily concerned about ever increasing numbers of external bads which the market cannot overcome. This conjecture has eventually been put forward by various other writers. Tollison and Wagner consequently ask whether there are yet unregulated fields where governments may intervene in the future, thus curbing the basic principles of a free society. They quote sugar and saturated fat, sunbathing and sports as potential fields of restraints. And they claim that such policies are driven by rent-seeking rather than objective requirements. These are definitely important issues. Unfortunately, the authors seem to neglect some problems arising from the issue at hand, smoking. Even if the detrimental effects of smoking were compensated by smokers somehow, the problem remains that quite many people dislike smoking. As a matter of fact they may not always be able to bargain with smokers or simply refrain from smoking areas. Whenever this is the case, one could infer that transaction costs are too high and hence the externalities are of the Pareto-irrelevant brand. This, however, boils down to the familiar problem of the impossibility of a Paretian liberal. That is to say, whatever the decisions in a society, restrictions on smoking leave smokers worse off, laisser-faire does the same to non-smokers. There is a basic dilemma. And despite its brilliance the book cannot resolve this dilemma sufficiently. In summing up, Tollison and Wagner have written an excellent book but one is tempted to ask: cui bono? Wolfgang Weigel Universitat Wien Austria
Apart from their debatability, scientific territories have always to be highlighted. Universitt
Robert D. Tollison and Richard (Kluwer Academic Publishers, xi + 253, ISBN O-7923-9224-8.
reviews
explorations
de Paris
661
of the
most
virgin
Jean-Dominique Lafay I-Pantheon-Sorbonne Paris, France
E. Wagner, The Economics Boston-Dordrecht-London,
of Smoking 1992) pp.
I like pipes, I like cigars. My friend George dislikes both. So I do not smoke when he is around and he does not shun my company. We owe this to each other as friends. But for the rest of the world I do not care, that is to say, I smoke whenever I like and I feel myself in accord with the economy. Robert Tollison and Richard Wagner have proved that. What they essentially attempt to show is that smoking does, contrary to a widespread belief, not give rise to inefficiency of an economy. That is to say, generally speaking smokers (cigarette smokers in particular) bore the cost of smoking already before the extensive anti-tobacco campaign was initiated, which still is going on. So, in principle there is no need for further government intervention. Consequently the question can be raised, why government policies toward smoking are performed. Applying the economic theory of interest groups, an approach which is embedded in the broader framework of public choice, the authors conclude that the government came under the influence of powerful interest groups. Thus, it is not the intention to cut overconsumption of tobacco in the spirit of the well known ‘merit-goods’-type of government activities, but rather to create redistributional effects. Smokers could suffer from smaller wages or even from less job opportunities. This is so because for example smaller firms in particular could not afford the provision of smoking sections in recreational areas. Therefore they prefer to employ non-smokers only. Also, small restaurants could get in trouble, since they cannot provide smokingand non-smoking areas simultaneously as easily as larger establishments. In the course of their analysis the authors claim to unmask many beliefs about detrimental allocational consequences of smoking as mistaken. Neither is the cost of health care unduly increased because of smoking, nor is the overall productivity of the economy affected. These are by far not all of the rather surprising findings. Even if one doubts these unexpected results, the book is worth reading because of the way in which the arguments are developed. Some parts take the form of critical appraisals of the stock of knowledge in issues in public finance. One fine example is the paragraph on the difference between
662
Book
and article
reviews
transfers and social costs (p. 94) which reveals the excellent craftsmanship of the authors. As becomes apparent from the concluding chapter of the book, one goal of the authors is to challenge the interference of governments with the private sphere of the citizens at large. There is definitely some truth in the claim that governments tend to be busybodies, thus not primarily concerned about ever increasing numbers of external bads which the market cannot overcome. This conjecture has eventually been put forward by various other writers. Tollison and Wagner consequently ask whether there are yet unregulated fields where governments may intervene in the future, thus curbing the basic principles of a free society. They quote sugar and saturated fat, sunbathing and sports as potential fields of restraints. And they claim that such policies are driven by rent-seeking rather than objective requirements. These are definitely important issues. Unfortunately, the authors seem to neglect some problems arising from the issue at hand, smoking. Even if the detrimental effects of smoking were compensated by smokers somehow, the problem remains that quite many people dislike smoking. As a matter of fact they may not always be able to bargain with smokers or simply refrain from smoking areas. Whenever this is the case, one could infer that transaction costs are too high and hence the externalities are of the Pareto-irrelevant brand. This, however, boils down to the familiar problem of the impossibility of a Paretian liberal. That is to say, whatever the decisions in a society, restrictions on smoking leave smokers worse off, laisser-faire does the same to non-smokers. There is a basic dilemma. And despite its brilliance the book cannot resolve this dilemma sufficiently. In summing up, Tollison and Wagner have written an excellent book but one is tempted to ask: cui bono? Wolfgang Weigel Universitat Wien Austria