# 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.

#### dj

more simply:

the cost of a vote for George Bush 2004-

1 trillion dollars (or more, many more) divided by 62 million votes:

\$16,000 or more

except now everyone is paying! or wiill pay or their chidren+ will pay...

#### Joan Stephens

Anyone for some common sense? How many smokers do you know in your personal life? How many doctors' and hospital visits have they "collectively" had in the past year -- mostly likely few. Now, how many non-smokers do you know? How about their doctor's and hospital visits? About the same percentage? This is a another "perception" problem. I don't know a family doctor that charts and reports visits or diseases of "smokers" as opposed to "non-smokers." If you smoke, "all" diseases are related to it. If you die at 80 or 90 and have smoked at least 20 cigarettes a day for ten years or more, it is reported as a "smoking related" death.

#### jamey aebersold

Someone mentioned transporting cigarettes in a armored truck.
WHEN WAS THE LAST TIME YOU SAW A TOBACCO TRUCK?

Why do the tobacco companies pass up advertising their brands on the sides of semis as they cross the country delivering cigarettes? They are afraid of having them hijacked. I'm sure they hate that missed opportunity to advertise Marlboro every day in big letters.

#### diane francis

Here's some figures as to the real cost of oil from the Middle East for Americans.

#### Bill L.

Have you guys really dug into the statistics about the famous decline in smoking in recent years (like you did with the crime statistics in your book)? Are these numbers (the decline) actually observed, or just self reported in surveys?

Could it be that people are lying more about their smoking habits, because it isn't cool to smoke these days (i.e. a social desirability issue, like not admitting to listening to Howard Stern or wearing seatbelts), and therefore the decline isn't as great?

I know this is not a scientific observation, but I swear I see more people smoking in their cars on the way to work every morning, their cigarrette just out their window the whole time so as to not “smell”, than I would expect to see given the statistics.

Also, lot's of young people (college to late twenties) smoke socially.

These folks probably would not admit to smoking in a survey.

I would not be surprised if a lot more people smoke but just don't admit it these days. It is just not perceived as cool anymore. It actually has a perceived trashy, lower class connotation for many.

Bill L.

#### Phil

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.)

#### Marc Brodeur

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.

#### coolrepublica

# 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?

#### Rob

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...

#### Eric

For individual smokers, not smokers as a group, the uncertainty regarding outcomes is very high. 3% is described by the authors as recommended by the OMB for regulatory planning. It is not a discount rate an individual would use.

\$25 is a lot, although there have been days I would have paid \$1.25 for a smoke.

#### Don

(Got an error the first time I sent this.)

Perhaps people with lower education levels tend to smoke more. The value of statistical life should be disaggregated by education as well as gender and age. Even so, I imagine that the final result would remain stunningly high.

#### TruePath

This is a bunch of crap.

They are using a model which takes the revealed preferences of workers in choosing how dangerous of a job to perform relative to the wages offered to infer the value those workers place on extra life years. For starters this sort of inference has crazy problems since almost by definition either a difference in risk represents a difference in job being performed (maybe risk/excitement in job correlate) OR a variable unknown to the decision makers (unless they read economics journals). But the real problem with this is that the background assumption here is that the deciscions people make about death risk reveal the value they place on life. Therefore the only coherent conclusion to draw from this analysis is that smokers value smoking at the \$222/94 dollars per pack.

I think it's horribly misleading and incoherent to assume that people's choices about risk rationally reflect the value they put on life and then turn around and use this to suggest they are being irrational in how they choose to take risks with cigarettes. If you are going to abandon the idea that people rationally weigh life value when taking risks in your conclusion you have to throw out the whole analysis.

This is almost as bad as the disgustingly common accounting analysises of the cost of smokers to society that (even those prepared by the actuary association) fail to include the substantial cost savings resulting from the early death of smokers. In effect those purported numbers estimating the cost to society from smoking are basically statistical bait and switch tactic which smear smoking by counting situations where a death resulting from smoking heads off many years of medical care and a different medically expensive death as a cost of smoking rather than a savings.

#### Truepath

Also I should add that the risk is almost certainly not linear in the number consumed so giving a price per pack is a big confusing.

#### Barry

"Risky choices" Mr. Dubner?
What planet do you live on?

90% of Marlboro starters are children 9-14. By 18 they want to quit, but can't. They are addicted by nicotine manipulated with diammonium phosphate. The very same thing that purifies cocaine known later as crack. The former is legal.

As to price tags on health this counter ad says it all:

#### Ted

At coolrepublica

The importation of slaves was banned in 1808 and therefore Marc's argument holds up.

#### Lenore

"The importation of slaves was banned in 1808 and therefore Marc's argument holds up."

Right. And the prohibition banned alcohol and we all followed that to the letter? It does not prove Marc's argument holds up.

The South likely would not have allowed the purchase of all of their slaves at once. If the North were to have bought them by sets, the South would have increased the dollar per head to make it progressively more expensive for the North. Do you seriously think illegal importation would not have happened if the value of a slave would progressively increase?

#### Drew

This is a bunch of BS. I'm a non-smoker and encourage people to not smoke but lying is no way to do it.
If packs cost \$222 how much would smokers spend on cigarettes per year? Well there are appx. 300 million american of which about 23% smoke. Assuming that they average a pack a day then we can figure...

300,000,000 x .23 X 365 X \$222 = \$5.5 trillion dollars per year.

So you're saying that smokers healh problems related to smoking equal \$5.5 trillion/year? or roughly half the total economic output of the entire country (GDP)? As I said BS.

You are not helping your cause by lying about facts. People see through it and then won't respect you in the future when you use real facts. Shame on you.

#### TanGeng

@2

But Lincoln did not go to war to end slavery. Kentucky, Missouri, two slave states stayed in the union. Moreover, slaves weren't free at the start of the war. Lincoln waited and waited. The war was about the Federal Government setting protective tariffs and it was about the right of secession.

@11

After the emancipation, the plantation owners said along the lines of "Hiring them for labor now is so cheap, why did we ever want to keep them as slaves?"

Once slaves starting being sold and freed, the plantation owners would realize that slavery was not economical, and the freeing of slaves would have accelerate and not decelerated. They would have become cheaper.

@Main Post and TruePost

Smokers don't value their smoking at \$222/\$94 per pack. They don't have good enough information to make the economic calculations that the Dubher made. Moreover, their insurance covers a lot of the health care costs. They're not going to see the full cost of smoking.

But smokers do know that it has negative effects. It's just like alcohol. They are accounting for what they can see and understand. They know that they are damaging their own health. They certainly value smoking far more than merely the \$4-\$5 dollars that it is per pack.

#### Joe Kinlan

#2: The Civil War was not initiated by an attempt to end slavery. It was the Confederacy that attacked the Union controlled Fort Sumter. Lincoln to that point had only sought to stop the spread of slavery to new territories and to deny the South's attempt to seceed. Te Emancipation Proclimation didn't happen until more than a year after Fort Sumter was attacked.

#### J Rosen

In re Lincoln: before he actually took office, several Southern States had voted to secede. He knew there would be war, and said that he had to maneuver so that the South fired the first shot, and South Carolina obliged him. The main tension that led to war was not slavery per se, but its extension into the new territories, and "bloody Kansas" was the focal point. The Emancipation Proclamation was a war measure confiscating rebel property (i. e. slaves), did not take effect until 1863, and left slavery intact in the border states that did not secede (Missouri, Maryland, Kentucky). Slavery was not legally abolished until the 14th Amendment was passed after the war was over, and Lincoln dead.

As for smoking...nicotine it is the most addictive substance known. As a recovering alcoholic, and ex-smoker, I have known heroin addicts who also smoked and they have all said that heroin was easier to kick. So whatever the cost, a heavy smoker would probably pay a lot to feed the habit (actually maintain, i. e. avoid withdrawal symptoms).
I recently lost a cousin in his early 70's to emphysema. He was a highly intelligent man --- every time you see a Movado ad, you are looking at his work --- but was never able to stop smoking, and he died a terrible death. The craving of an addict works on a more basic level of the nervous system than cognition and obviously cognition will not attack it...as any recovering addict knows literally in his nerve-endings.

We will always have some problem with all these substances...which is why I believe they should all be legalized, regulated, and taxed, the proceeds going to treatment programs which work a significant amount of the time.

And I'd not be sorry to see the tobacco company execs who plotted to secretly jazz up the nicotine content and intensify the addictivity of their product tried and convicted of, at the least, negligent homicide on a mass scale.