James Schneider  

Smoking Prevention: Nagging versus Taxing

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Often times, government policies are ostensibly about providing knowledge, when they are actually about nagging. Consider cigarette warning labels. They now take up more space on the packaging than they did in the past, but they still provide surprisingly little knowledge about risks. Instead, there has been a trend of making them disturbingly graphic. Many countries require large pictures that show the disgusting impact that cigarettes can have. Many of these pictures cannot be considered as providing relevant information. For example, showing that diseased lungs look disgusting is hardly relevant for decision making; after all, lungs are generally shielded from view, so most people do not have strong preferences over what their lungs look. These types of pictures are justified on the grounds that written messages like "Smoking Kills" are no longer effective (in the sense of continually decreasing smoking rates). While scientific information will dissuade some potential smokers, other people will go ahead and smoke anyway.

Perhaps some people have cognitive limitations and can only process emotional or pictorial information. However, the main impact of graphic pictures is probably to make the experience of smoking less pleasant. Most people do not want to look at pictures of diseased bodies. By forcing smokers to look at gross pictures a dozen times a day, they get less enjoyment from smoking. Likewise, the emotional graphics of second-hand-smoke victims serve as not-so-subtle nagging. In this way, gross pictures can be a substitute for taxing cigarettes (another common way of making smoking less attractive).

To the extent that educating, nagging, disgusting, and taxing smokers persuade them to quit, all these approaches leave would-be smokers healthier. However, most new measures will have only limited success, so it is important to consider the impact that a policy has when people persist in smoking. Taxation makes smokers worse off, but it generates revenues that make non-smokers better off. Nagging and disgusting smokers makes the smokers worse off with no corresponding benefit to non-smokers. For this reason, nagging warning labels might be less efficient than taxation.

The United States was ready to require pictorial warnings in September 2012, but implementation was delayed due to litigation from cigarette companies. The courts ruled that the graphic labels could only be imposed if evidence existed that the labeling actually reduced smoking. Towards this end, researchers used auctions to demonstrate that pictorial labels decrease demand. How does this work? Researchers offer to pay smokers to participate in a short experiment. By paying the smokers sufficiently for their time, researchers get broad participation that hopefully eliminates the impact of volunteer bias. The study used a variation of the second-price auction. In a standard second-price auction, participants bid, and the highest bidder pays the price of the second highest bidder. What is the optimal strategy in this type of auction? Each participant should bid the highest price at which she would be willing to purchase the item. This allows the researchers to infer each smoker's exact willingness to pay. In this type of research, it is not necessary that participants actually bid against each other. Instead, a randomly chosen number can serve as the highest competing bid. Although the competing bidders are simulated, the auction is genuine in the sense that outbidding the simulated bidder results in an actual transaction: cigarettes are exchanged for cash. This implies that people have an incentive to reveal their true preferences since actual money is involved.

What did the experimental auction show about cigarette warnings? Extending the space given to a text warning had a minimal impact on the demand for cigarettes. However, adding a disgusting picture of mouth cancer reduced willingness to pay for cigarettes by 12 percent. The graphic picture along with plain packaging reduced bids by 17 percent.


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COMMENTS (7 to date)
andy writes:

While scientific information will dissuade some potential smokers, other people will go ahead and smoke anyway.

We gave them information and they made a decision. 'We' think they made the wrong decision, so 'we' will push them to make the 'right' decision. We will try to make them pay for the 'wrong' decision, we will plaster horrible pictures on the product, we could wake them up spilling cold water over them, yell at them in dark streets, administerelectric shocks depending on how often they make the 'wrong' decision, feed them food mixed up with ash.

I think we could prove that all these things will have noticable effect on smoking rates, I am sure we could even prove it using some auction type study. And then - what?

Then sell cigarette pack cover along with cigarettes and see what happens: http://www.alibaba.com/showroom/cigarette-pack-cover.html

James writes:

"Nagging and disgusting smokers makes the smokers worse off with no corresponding benefit to non-smokers."

Yes, smokers are made worse off but everyone knows that. The supporters of these policies don't care if they are making smoking less fun for those who choose to smoke.

I'm sure someone must benefit or there would be no pressure to implement the policy. People get satisfaction from meddling.

For all I can see, maybe these disgusting pictures are efficient in a Kaldor-Hicks sense. Maybe the meddlers would be willing to pay some amount for forcing smokers to look at gross pictures that exceeds what smokers would be willing to pay to not look gross images.

Bostonian writes:

The acts male homosexuals engage in, traditionally condemned as sodomy, spread AIDS and other sexually transmitted diseases. But expressing disapproval of those acts is not considered by liberals a contribution to public health but merely bigotry. Government recognition of homosexual marriage effectively endorses such acts.

If the government should not nag homosexuals, I wonder why it should nag smokers.

MingoV writes:

Every study I've seen on cigarette smoking shows that no amount of written, graphic, or video warnings reduces smoking. For teenagers, these warnings are likely to increase smoking because it's 'cool' to take risks and defy authority. That psychology is why 'coffin nail' is a common synonym for a cigarette.

Very high taxes reduce smoking among the poor and the price-sensitive lower middle class. But that lasts only until bootleg cigarettes arrive, as New York City learned a few decades ago when cigarettes were bought in New Jersey and sold clandestinely or were bought by the truckload in North Carolina and had fake tax stickers applied.

One fact to note is that nicotine causes a stronger medical addiction than any commonly used 'recreational' drugs, including opiates and barbiturates.

R R Schoettker writes:

"Taxation makes smokers worse off, but it generates revenues that make non-smokers better off"

Anyone who could make this statement is suffering from a serious "cognitive limitation" of their own!

That funding a criminal state with money extracted by coercion from smokers or anyone else can be speciously claimed as a benefit to the people it is then expended in victimizing with its thuggery is ludicrous nonsense.

P.S. By the way; have you ever heard of a cigarette case?

sixxfingers writes:

The problem with trying to tax them out of existence is that it invites to the party that pesky old ruiner of best intentions, the unintended consequence.

If tobacco products are taxed to the point that they're no longer affordable in the free market, a responsive black market will quickly rise and proliferate and a new class of criminal will have once again been created (unnecessarily) by officious politicians.

This, of course, will create (again, unnecessarily) all the concomitant problems associated with outright prohibition.

Jerome Bigge writes:

I can see limiting smoking when it adversely effects others. Where it does not adversely effect others, there is no reason to do anything about those who smoke. They are harming no one but themselves by smoking.

As for the idea that smokers increase the cost of health care for everyone else, this is simply due to a flawed system of health care where people are relieved of responsibility for their own actions.

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