When a Pack of Cigarettes Costs \$222

Kip Viscusi, who teaches economics and law at Vanderbilt Law School, has written widely and well on the risky choices that people make, especially smoking.

A new working paper, co-authored with Joni Hersch, attempts to put a price on each pack of cigarettes smoked:

This article estimates the mortality cost of smoking based on the first labor market estimates of the value of statistical life by smoking status. Using these values in conjunction with the increase in the mortality risk over the life cycle due to smoking, the value of statistical life by age and gender, and information on the number of packs smoked over the life cycle, produces an estimate of the private mortality cost of smoking of \$222 per pack for men and \$94 per pack for women in 2006 dollars, based on a 3 percent discount rate. At discount rates of 15 percent or more, the cost decreases to under \$25 per pack.

By comparison, eating a cheeseburger is much, much cheaper.

1. Phil says:

So is this an example of people not behaving in an economically efficient manner?

Because, if you took smokers, and offered them \$222 CASH for every pack by which they reduce their consumption … well, I bet most of them would find a way to quit, and fast. A pack-a-day smoker would receive almost \$80,000 a year.

(I realize this is double-counting … assume that the smoker who receives the \$222 would continue, somehow, to receive the bad health effects even after quitting.)

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2. Phil says:

So is this an example of people not behaving in an economically efficient manner?

Because, if you took smokers, and offered them \$222 CASH for every pack by which they reduce their consumption … well, I bet most of them would find a way to quit, and fast. A pack-a-day smoker would receive almost \$80,000 a year.

(I realize this is double-counting … assume that the smoker who receives the \$222 would continue, somehow, to receive the bad health effects even after quitting.)

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3. Marc Brodeur says:

Comment #1 reminds me of the thing I read that instead of the US Civil War, it would have been cheaper for the North to buy all the slaves from the south and free them, instead of finance the war. Obviously for political reasons it would not be possible, but that line of thinking seems pretty parallel to our current war situation.

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4. Marc Brodeur says:

Comment #1 reminds me of the thing I read that instead of the US Civil War, it would have been cheaper for the North to buy all the slaves from the south and free them, instead of finance the war. Obviously for political reasons it would not be possible, but that line of thinking seems pretty parallel to our current war situation.

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5. coolrepublica says:

# 1 Phil,

We need to have a talk about the meaning of addiction. If bribing addicts to quit worked, we would not have addicts. But things aren’t that easy. How much would I need to give Britney Spears to get her to quit. Somehow 80K seems little.

#2 Marc,
It would not have been cheaper to buy all the slaves from the South and free them, instead of financing the Civil War. Lincoln wanted to end slavery in America once and for all. If he did not go to war and just purchased the slaves, it would have meant that he was prepared to purchase every slave that the South would be bringing back from Africa to replace the one he had purchased. It would have been a very expensive endeavor. I think it would have cost many times the war’s cost to sustain buying slaves from the South in perpetuity.

And I don’t see the parallel between buying slaves from the south to free them during the Civil War, and our current war situation. Would Marc and anyone else who understand the parallel, clue me in?

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6. coolrepublica says:

# 1 Phil,

We need to have a talk about the meaning of addiction. If bribing addicts to quit worked, we would not have addicts. But things aren’t that easy. How much would I need to give Britney Spears to get her to quit. Somehow 80K seems little.

#2 Marc,
It would not have been cheaper to buy all the slaves from the South and free them, instead of financing the Civil War. Lincoln wanted to end slavery in America once and for all. If he did not go to war and just purchased the slaves, it would have meant that he was prepared to purchase every slave that the South would be bringing back from Africa to replace the one he had purchased. It would have been a very expensive endeavor. I think it would have cost many times the war’s cost to sustain buying slaves from the South in perpetuity.

And I don’t see the parallel between buying slaves from the south to free them during the Civil War, and our current war situation. Would Marc and anyone else who understand the parallel, clue me in?

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7. Rob says:

At this price, cigarettes become a commodity. Here in Ontario, every time the price of cigarettes increase, robberies in convenience stores increase. At \$222, they’ll be transporting cigarettes in armoured vehicles…

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8. Rob says:

At this price, cigarettes become a commodity. Here in Ontario, every time the price of cigarettes increase, robberies in convenience stores increase. At \$222, they’ll be transporting cigarettes in armoured vehicles…

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