Sunday, October 28, 2007

Market pressures that help eliminate cigarette smoking addictions

I am occupied in my work with thinking about government policies for reducing the damages of cigarette smoking. There are also market mechanisms that operate to reduce damages automatically. In most cases these can be given a boost by government policy.

On the demand side that smoking causes disease encourages smokers to pay others to help them quit – this is the opposite to most patterns of consumption – here you pay to stop consuming. Private ‘quit’ clinics can be supported by public subsidies and public information campaigns. There is also a market for smoking substitutes such as nicotine replacement products and smokeless tobaccos. I have discussed such markets many times – they can be given a prod by subsidising such products or providing better information about their availability.

There are supply side effects as well since smokers are an input into the production of outputs and their illnesses impact on firm productivity. Indeed, smoking imposes health costs of around $16,000 on US employers so employers find it reasonable to invest $900 to help smokers quit. Firms are doing the same with respect to other chronic health conditions such as obesity and diabetes. Firm support supplements the role of public inducements to quit cigarette smoking. I suspect it is also an independent confirmation to a smoker of the huge health benefits from quitting. A smoker might with good reason think: If a profit-seeking private firm is prepared to devote resources to encouraging quits maybe there is some substantial damage being done to my health.

The ASH Australia website cited costs to business in Australia on $3.5 million from smoking but I don’t have specific information on programs within firms to cut smoking here. If readers knew of any – or had links to interesting material I’d appreciate hearing about them. Perhaps a group such as the Business Council of Australia might think of taking up this issue.

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