Which Is Worse: Fewer Pubs or More Unhealthy Citizens?
A journalist writing for the Financial Times complains that Britain’s indoor smoking ban has resulted in more pubs closing and a decline in beer sales of 10 percent.
I believe that smoking and beer drinking are complements for the average consumer, so he is no doubt correct that the decline in demand for beer has shifted the industry demand curve leftward and forced some pubs out of business. He views the whole effort as disastrous and notes that the absence of pubs, a focus of social life in small towns, will impose a negative externality through reduced feelings of community.
Perhaps, but he ignores the whole point of the laws: to remove the potentially severe negative externality produced by second-hand smoke. The net effect of such laws on economic welfare just isn’t clear, but it is poor analysis to ignore the main effect that has led countries to enact them.