Anti-smoking laws and economics

In New York City, it’s illegal to smoke in a bar or restaurant.

I think this law is great. You can go out to a bar, and not have to deal with cigarette smoke irritating your contact lenses, and not go home with all your clothes smelling like they were dipped in an ashtray.

I conclude that restaurant/bar smoking imposed a significant externality upon non-smokers that outweighed any pleasure that smokers got from smoking. The anti-smoking laws have maximized the economic value of society.

Now I know that libertarians will say that it’s not the government’s business to maximize the value of society, which is something I disagree with.

Free marketeers will say that if smoking was so harmful to non-smokers, the bars and restaurants would have banned it without government intervention. And this I disagree with too. The free market assumption is based on markets being efficient, and clearly markets aren’t always efficient. (NASDAQ bubble anyone?)

The long established tradition of smoking in certain types of establishments remained even after society’s attitude towards smoking had changed. With smokers having very strong expectations of smoking, and restaurants and bars reluctant to tell smoking customers to take their business elsewhere, the status quo with its negative economic consequences was only able to be changed by government action.

My support of anti-smoking laws in public establishments should not be taken to assume that I support making the practice entirely illegal. If people want to harm their health in a manner that doesn’t create any externalities, then I’m all in favor of it, and in fact I’m in favor of marijuana and cocaine also being legalized.

Comments

[Scott S]

Your argument only makes sense if people were forced to enter bars/restaurants, and if the business owners got paid through forced tribute rather than providing a service people willingly pay for. In other words, if the government ran bars/restaurants. But they don't, at least not yet, and so the monopoly of force that is government has no justified say in how a private business owner can run that business if they do not violate the liberties of others. You should read the Constitution some time, it's a very interesting document, even if it is rarely enforced.
Why are there SUVs? Because there is a market for them. Why is there pornography available on the web featuring old women and young men? Because, as disgusting as it may be, there is a market for it. Why do bars permit smoking? Because there is a market for it. If the bar/restaurant owners felt they could make equivalent (or better) profit by banning smoking in their establishment, then the market would show that. Government run deficits because they can get their money through the barrel of a gun (and because they can always make more money). Business owners make profits or they go out of business. The free market may not be 100% efficient, as that would require omniscience, but good lord don't pretend to think that government knows anything about eficiency. Letting people freely trade is the best us imperfect humans have, and it's a shame they must struggle against the arrogant and self-righteous who think they can 'fix' the market through government force.

Shame on you Half-sigma, you are normally smarter than this, and your insistence that limiting people's options actually advances society is tired and weak 'modern' liberalism at its worst. Or is this another ploy to get people to respond, like your "all muslims are evil" posts?

[Half Sigma]

I explained why I like the law. It benefits me personally. It benefits anyone who is a non-smoker, and non-smokers are the vast majority.

How did the minotirty of smokers manage to hijack all the bars and make it their domain? Obviously via inefficient markets.

[Scott S]

And you call that the "politics of common sense"? Advocate the laws that personally benefit you, without regard for the liberty of others? Two wolves and a sheep voting on what to have for dinner? At least have the sense to realize you have no basis to complain about any law, since someone out there benefits from every single one, and that's apparently the critera you use to determine what is just.

How did smokers hijack bars? Simple, they didn't, since nothing forced a bar owner to allow or ban smoking in their establishment - at least nothing did until your government goons got involved.

[Daniel]

The NASDAQ bubble is not evidence of the absence of an efficient market. Efficient means that the price took into account the opinions of all participators to arrive at the going price. These participants' opinions may be wrong, but this doesn't change the fact that the market factored all those opinions in.

[William]

Little hypocritical to argue against government recycling trash, which is already entirely their domain, and then for the government regulating smoking in private enterprises...

And the constitution shouldn't come to bear in this. It's the city government of New York making the laws here, not the federal government, although neither the federal nor the city government guarantees the right to smoke.

[Scott S]

"although neither the federal nor the city government guarantees the right to smoke."

Wrong, as the federal government does not give rights, the Constitution sets out the limits of what the federal government may do - and everything else, thanks to the 10th amendment, is left up to the States and/or the people.

So you are correct that the Constitution of the US has no bearing on the draconian smoking laws in NYC (although the 14th amendment ensures that governments at any level do not have a blank check ability to restrict people's liberties). But you are incorrect in believing that smoking is a priviledge that can be taken away justifiably by the federal government. Not without an amendment.

[probligo]

Personally, I side with Half Sigma on this one, up to the point of legalising cannabis and cocaine - that is a definite no-no for me.

In the past two years, since NZ Government banned smoking in bars, I have had six more "bar evenings" than I had in the 35 years prior to that IN TOTAL. Y'know what? I enjoyed every one of them!!

The only problem identified from the ban has been a greater awareness of another smell.

BO.

[superdestroyer]

The problems with many bars and restaurants is that the owners or managers are smokers. Thus, the do not use profit optimizing when deciding how to manage smoking. The other question is why should eating establishments be the one work place where smoking is allowed. Should 21 y/o waiters be exposed to smoking when 51 y/o office do not have to work around smoking?

[Scott S]

Amazing. Now not only are customers forced to enter eating/drinking establishments, but employees are forced to work there!

You like eating or drinking someplace where there isn't smoking? Great - go to places that offer that option. There aren't any in your area? Oh my, it must be your right to go to whatever bar/restaurant you want and dictate the owner's smoking policy. Please people, try to think a little bit beyond your myopic desires and try to see the outcome of such a policy when setting social rules. Gone is the concept of property rights, since what one can do with their property is at the arbitrary whim of whatever a base majority believes suits them. And as David Friedman succinctly put it, "Property is a central economic institution of any society, and private property is the central institution of a free society.". Oh sure, society (or even the cesspool that is NYC) will not crumble by forcing business owners to not allow smoking in their establishments. But once liberty is taken it is rarely given back, and while today it's just bars/restaurants in blue states, tomorrow they will try to dictate what those owners may serve. Oh wait, they are starting to do that now:

http://money.cnn.com/2005/08/11/news/midcaps/nyc_restaurants/
(don't worry, it's not a law...yet)

(and I'm sure people unable to stop themselves from eating out will applaud it when it does become law)

As for legalizing cannibas, it's come to the point where anyone who seriously believes marijuana poses a greater threat to society than either alcohol or over-the-counter sleeping pills or even caffeine is either ignorant of the facts of marijuana, or is delusional. Here's a good starting point: http://www.mjlegal.org/sources.html

Also, a little history quiz. Name the one period in history when people shot each other over alcohol distribution and consumption. Give up? Why when government in the US prohibited it. Hmm, I wonder what we can learn from that, and I wonder if that makes the claims of today's drug czars, that crime and violence go hand-in-hand with illegal drug use, irrational. Give up? It does!

[Half Sigma]

When it comes to regulation of bars, the 21st Amendment specifically gives the states broad powers.

So I'd have to disagree with any argument that it's unconstitutional for states to prohibit smoking in bars.

[Michael A. Clem]

Inefficient markets? Of course there are inefficient markets! They're inefficient because they have to deal with myriad rules and regulations, from alcohol licensing to zoning regs (a to z) and everything in between. To assume that minority smokers control the restaurants and bars due to inefficient markets is hardly a justification for more government regulation, but instead requires that we look at already existing regs to see how they've influenced the current situation.
Also, we must consider what the market actually is. How many people go to a bar to drink beer and expect or want it to be smoke-free? Even in restaurants, it's not just the food that is being sold, but the complete dining experience. Regulators who insist on micromanaging the experience may end up unintentionally creating an even more inefficient market in alternatives, or even illegal/underground for smoking.
Of course, this is in addition to the basic arguments about the rights of private property owners to decide how to run their businesses (and they *are* private property, even if the "public" is invited).
You're the one with a BS in economics. Show that such laws actually maximize value in society, and aren't just creating other, not yet visible, unintended consequences. And, hey, if you're right, then why *shouldn't* government outlaw smoking altogether? Surely, by your own argument, such a move would also maximize value in our society?

[William]

NYC has the right do anything it wants with its bars/restaurants. That's all I wanted hear. If you want a city whose citizens don't trust it with that kind of power, move somewhere else (Amsterdam?). NYC seems happy with the government's actions.

[Scott S]

William, I have no doubt that even if the libertarians can get ahold of Washington DC and force the politicians to actually obey the Constitution, there will still be plenty of pockets of socialism at the local level. There's a natural urge in many people to dictate how others should live, even if it doesn't directly impact them. From the morality police on the right to health police on the left, people can't wait to restrict the liberty of others, and many of those others can't wait to be restricted for their own good. What worries me is that the rationale used to justify these laws are severely lacking in basic concepts - private property for one, and a distinction between consenting activity and force. This worries me because our federal government is not restricted to the Constitution in practice, and if there are many people who share the kind of self-serving and ignorant positions as espoused by those in favor of the smoking ban, this can only mean federal legislation could be on the horizon. So when I read someone who normally comes across as having reasonable arguments, justify a smoking ban because he gets to enjoy the bar scene more, it makes me sad - not just for the rats in NYC, but for us all.

[Michael H.]

Hi Half Sigma
I think it is interesting that the market didn't create smoking and non-smoking bars. Maybe there were examples of non-smoking bars but they must have not been very common. I remember restaurants used to have smoking and non-smoking sections and the non-smoking section was typically too small. Why did the restaurant and the bars think it was better business to upset the non-smokers than the smokers. Was it perhaps that the change was occurring but slowly?

I don't like smoking but I think smokers should have their own restaurants and bars to requent and maybe airplanes as well. As long as I don't have to smell their smoke, they should be free to do as they please. But I do wonder why the market didn't produce that result on it's own.

[Michael A. Clem]

If I remember correctly, a restaurant association article said that smokers tend to spend more than non-smokers when eating out. That may be at least part of the answer, even if it doesn't completely explain it.
What I want to know, though, is if people were so outraged about smoking that they would pass laws, then why weren't they doing something before the laws were passed?
Two possible answers. One, they were doing something, but it hadn't yet become big enough to be noticeable (and it's possible change would have come about without ever making the news). Or two, people really weren't outraged enough to do much about it. Which would prove once again that it's easier for people with power to make political changes without concern for economic or moral considerations or consequences.

[probligo]

"What I want to know, though, is if people were so outraged about smoking that they would pass laws, then why weren't they doing something before the laws were passed? "

We did. We preferred to eat at home rather than go out. We preferred to drink at home than go to a bar...

Eating in a restaurant has become that much more attractive since the long lost / well lost days of having to put up with the clouds of smoke.

It is also a more common treat than it used to me...

[William]

"There's a natural urge in many people to dictate how others should live, even if it doesn't directly impact them."

So, if pollutants from factories (cars, power plants etc.) are currently causing 130,000 respiratory deaths a year (in the US), would I be infringing upon their property rights to tell them to stop pumping their emmissions into my atmosphere, because it doesn't affect me directly? Should I just wait around for the free market to provide me with a gas mask? Or should I take action to protect my environment through the body best oriented to take that action, the government? Seems obvious to me.

[Scott S]

"would I be infringing upon their property rights to tell them to stop pumping their emmissions into my atmosphere, because it doesn't affect me directly?"

If you are affected by pollution, then you are being directly affected by the actions of another, and - under a consistent system of property rights - would have a claim for compensation.

http://www.cato.org/pubs/chapters/marlib23.html

"Free-market environmentalism, like capitalism itself, is dependent on private property rights. Those rights must be well defined, well defended, and voluntarily transferable. When those prerequisites exist, competitive capitalism becomes a remarkable efficiency generator. The desire for profit leads directly to the elimination of waste. Pollution is generally some form of waste, but even if pollution were unavoidable in certain manufacturing processes, strongly enforced property rights would force polluters to either clean up or close shop. By definition, pollution is a trespass against someone's property or person. If the trespass is so minor that it creates no impact or inconvenience for the property owner, it will normally be tolerated, even under common law rules. Today's pollution dilemma is the result of what is essentially a universal "easement" granted by the state to polluters, even producers of significant and damaging pollution. The debate now revolves around how best to gradually restore their original right (to be free of the trespass of pollution) to citizens. The first question that should be asked is not, Why does capitalism destroy the environment? It is, Why isn't everything already polluted or destroyed? The answer is that the same private property rights that form the basis for capitalism also stand as a bulwark against environmental degradation."

"Some environmentalists see limits to free markets at every turn. Yet those same individuals see no limits to government. Past environmental policies have been designed as if politically directed resources automatically become unlimited. Those environmentalists' excessive faith in government is as unwarranted as their visceral opposition to private ownership of resources. The free-market environmental vision does not purport to eliminate the state (or state involvement); it merely limits it to an appropriate role."

"For most Americans, environmentalism is an important value, but it is not the only one. Jobs, housing, health care, education, national defense, and other values make demands on the resources of the individuals who constitute society. Like it or not, ecological purity must compete with other objectives. Therefore, a responsible policy must allow individuals to make choices for themselves, consistent with the rights of others. In the final analysis, to be compatible with the full array of individual values, environmental policy must adopt a free-market approach."

See also:
http://www.fee.org/vnews.php?nid=3850

[Rae Smith]

Are the taxes from cigarette more or less than the health care cost for individuals who smoke. If the governments won't take cigarettes off the market, then they should stand behind those who fill their pockets!

[Brad Meyer]

I read parts of the above, I am a non smoker and I wish that more states should ban smoking in all public places including Pennsylvania, the state in which I live. I make an effort to avoid places where smoking is permitted. I never drink alcohol so avoiding bars is no problem for me. I do like to eat out once in awhile, I just visit shops where smoking isn't permitted, such as deli's.

Laws are in place to protect you and protect others from you. Some people are just too stupid to care about themselves so they need help caring about others.

As new laws are enacted, society will just have to adapt. Present bars will close if smoking is banned and new ones will open that other outdoor smoking areas.

I am all for raising the price of cigarettes to fund the government to lower taxes of the non smokers. If individuals want to waste money then lets put it to a better use.

Thank you

[Dark One]

I am a non-smoker and I have a question that i would like answered, that is how much value does the American society as a whole put on the life of a human being?

From my own point of view I feel that the people of America do not even think about this question because if they did they would realize that we are allowing the tabacco companies to kill us and any other people that they can hook. Even with this said I still have faith in the American people and our government because of the new smoking bans that are being put into place to protect our wellbeing and the wellbeing of those around us.

If there are those of you that are to ignorent to recognize the fact that cigarettes kill more people than heart attacks, STD's and cancer combined then I would have to say that you as a person of the U.S. if you are doing nothing then you are letting your childeren and you loved ones be poisoned and slowly killed off, one by one for the profit of the tabacco companies. But hey, I know how the saying goes "ingnorance is bliss" right?

Wrong.

If ignorance was bliss we would be able to inore the fact that in order for the tabacco industry to keep going and to keep making money they would have to be able to 'hook' the next generation on tabacco and we would be able to go about our lives with a clear concience. do you know what the saddest part of that statement is? It's the fact that we do this every day. We let the tabacco industry get away with killing our childeren! and we make it legal for them to do so.

All that I am asking is that we stop thinking about our needs right now and even for just a while think about the kind of future that we want to create for the generations that will follow us. If all you do is sit and read my message and do nothing then you may as well go down stairs, take out a knife and slit the throats of all your childeren and your wife or husband. the only thing that this would accomplish would be saving your your loved ones from the pain, suffering and eventual death that they would endure from the effects of smoking.

I am completly in support of the smoking bans that the government of New York has put into place. At the very least the government and the people of New York can say that they are looking out for the future and are trying to make it a better place regaurdless of the amount of money that the New York legislature and government will lose in the near future because of the smoking bans. I feel that no matter how much money is lost each and every person that reads this would be willing to spend that much money and mor to save the life of their son or daughter, wife or husband, or even their mother, grandmother, father, or grandfather. But if this is not how you feel then you would be saying that you would be willing to allow your loved ones to live in a world that has products in it like cigarettes that gauged only towards turning a profit and making people you don't even know richer and richer by sacrificing the lives of the people that you know and love. I know that one of the arguments that I will encounter by writting this is that most of the chemicals that are found in cigarettes can be found in many other products that are sold around the world, but I have to ask you what you think the tabacco companies are doing in order to lower the amount of poisons that enter a persons body when they smoke or at the very least make it safer for those of us that are affected by secondhand smoke.

Anbody have any idea?

Let me help you. the tabacco companies are doing nothing and that is because the American public is not putting pressure on the tabacco companies to do anything about the hundreds murders they are commiting every day. many of the chemicals that are in cigarettes can be found in food or houshold cleaning items, but the great thing about that is that the companies that manufacture these products tell you how to use their prodcts without causing harm to yourself or those around you. I also kno that there are some people that use these items incorrectly and then they can be dangerous but how exactly does a person use a cigarette incorectly? are you not supposed to put it in your mouth lite it up and draw in a breath of smoke and then procede to exhale? as far as I know that is exactly how a cigarette is supposed to be used and yet it still kills people. coincidence? I think not.

So I ask you, are you willing to stand by and live in your own little personal bubble and do nohing while the tabacco companies sell their product that when used as it shoud be it is supposed to hook kids and adults and keep them hooked until the day they die? or, instead of complaining and debating about the politics of the situation, get up and do what you can to shut down the biggest mass murders in the United States.

"Together we stand, Divided we fall"

The choice is yours.

Thank you

[Mark Seecof]

Smokers (mostly) are addicts. They place an extreme subjective value on smoking--just look at them shivering on stoops outside nonsmoking venues while they suck down their fixes.

Nonsmokers (mostly) are more flexible. They dislike smoke, but they will tolerate a fair amount of it.

The reason ordinary competition does not produce any non-smoking restaurants or bars is that restaurateurs/ publicans maximize their profits by allowing smoking. Non-smokers are more willing to accept smoke than the other way around, so they almost never outbid smokers for restaurant air.

However much nonsmokers might be willing to pay for smoke-free dining, smokers are willing to pay more for the opposite.

HS is right about government intervention here. Smoking has significant externalities. Clean air is one of the few classically-defensible cases for government interference in trade.

[superdestroyer]

Competition did produce many non-smoking restaurants. In Colorado during the 1990's many restaurants openly advertised that they were non-smoking and even joined together to produce booklets with lists of restaurants that were non-smoking.

I think the problem with NYC with that it is a city with a high number of immigrants and a large number for foreign tourist. Both of those groups smoke at much higher rates than native born Americans. I also believe that the reasons that most bars want to allow smoking is that many of the employees and especially the owners smoke.

[AR]

Wow, a lot of verbal diarrhea on this post. One thing I learned in law school is that libertarians are notorious for oversimplifying complicated issues. Life to them is black and white. Trying to argue with a libertarian is like arguing with someone who has just finished reading Economics 101 for Dummies, and thinks he is now equipped to solve the world's problems. I've since learned that the best way to argue with a libertarian is to not argue with him in the first place. You will not convince that person of the stupidity of (some) of his positions, nor will you come out of the argument a more informed individual.

[Curtis H]

Rather an odd argument......
"I think this law is great. You can go out to a bar, and not have to deal with cigarette smoke irritating your contact lenses, and not go home with all your clothes smelling like they were dipped in an ashtray."
In this case the patron would go home smelling of beer, vodka, or some other substance deemed acceptable. Personally I would much rather deal with a driver smelling of smoke instead of vodka.
Here's a thought.... Let's develop a test for nicotine content... Say if you only have 2 cigarettes an hour your ok.
........
"The anti-smoking laws have maximized the economic value of society" Give me a break! We have a society full of alcohol addicted, caffeine addicted, and obese food junkies. But if they don't smoke their a value to society.

[anonymous]

not to make any trouble to facts that I only read a couple of comments, and I was just wondering if any of these people smoke themselves. It really makes you wonder does'nt it? Well, I just wanted to thank you for the many ideas you gave to me for my paper. I guess I just needed a jump start. I am going to write for my english class.
You have very good ideas that even a younger age can understand. I guess it is now officially brain storming time. Also time expand my mind and have a snack.:)

[Evangelos Benos]

The real economics of smoke bans:
Smoking creates a negative externality and standard micoreconomic theory tells us that in the presence of externalities Competitive equilibria are not Pareto Optimal: in plain English, market outcomes are not efficient. How do you correct the inefficiency? One way is for the government to impose by law the optimal level of the externality-generating activity (smoking). However this assumes that the government knows what this optimal level is. In reality it does not know it because the optimal level is a function of people's personal preferences (marginal utilities and costs in the economic jargon) of which the gov has no knowledge. So, is there any other solution? The answer is YES: Assign property rights to an externality-free environment and make these rights TRADEABLE between externality receivers and externality generators. How do you implement this in practice in the case of smoking? Well, this is tricky, but perhaps the following could be done:Mandate first that at any time 10% (say) of all bars can allow smoking. Then issue monthly or annual smoking permits and auction them off to the bars (every month or year). The bars purchasing these (limited) permits will naturally pass the cost to their smokers-patrons. Notice that in the process, the governmnet generates cash (which could be used to support anti-smoking campaigning). What does this result to? Everybody will be happy: The smokers will be able at an extra cost to go to a bar and smoke. The non-smokers will enjoy a smoke-free environment in 90% of the bars. Finally, the local authorities will generate money. Of course this does not facilitate direct trading between smokers and non-smokers but it is close enough as the smokers do get to pay to have the right to smoke. This solution still deviates from the socially optimal one but it is closer to the socially optimal than both a complete ban of smoking and the complete absence of any smoking restrictions.

[Frank N. Stein]

Evangelos,

There is no such thing as a negative externality imposed on someone who has the choice whether to buy the good/service.

Does the fact that a Toyoto Yaris not have a 300hp engine impose a negative externality on those who like fast cars, thereby justifying government regulation?

Government-imposed smoking bans in privately-owned establishments is a violation of property rights, and any attempt to bring in economic cost/benefit analysis divorced from the foundational concept of property rights is irrelevant obfuscation.