The Price of Smoking
Is it really worth $40 per pack to smoke cigarettes? According to Duke University health economists, $40 is the real cost that a 24-year-old smoker should consider each time he or she purchases a pack of cigarettes. This amounts to $220,000 for men and $106,000 for women who smoke over their lifetimes. Of the nearly $40-per-pack cost, the smoker bears $33. The remaining costs are borne by the smoker's family ($5) and by society ($1). (Figure) Sloan and colleagues present the most comprehensive analysis yet of the cost of smoking. They combine national data from several sources in an innovative way to develop detailed estimates of the economic impact of smoking. The book breaks new ground in using a lifetime-cost framework that carefully teases out the "internal" and "external" costs of smoking -- that is, the part of the cost the smoker bears versus the part imposed on others. They consider the contributions that smokers make to revenues (including health insurance premiums, Medicare, Medicaid, and Social Security) and evaluate whether nonsmokers subsidize smokers in insurance markets. They use their models to evaluate whether current cigarette taxes and payments under the Master Settlement Agreement reached with the tobacco industry in 1998 are set at reasonable levels. The book is easy to follow, even for a noneconomist. The authors begin by reviewing the existing research on smoking costs and describe the data they use and their analytic approach. They next detail the effect of smoking on mortality, health care expenditures, Social Security, private pensions, and insurance programs. Finally, the authors consider the effect of smoking on the health of family members, especially spouses. That smoking costs a substantial amount in terms of health care services, lives lost, and other costs will not surprise those who follow the ongoing saga of tobacco as public health enemy number one. It is somewhat more controversial that smoking actually saves Medicare money by killing off sick smokers at earlier ages, even after the smoker's payroll tax contributions to the program are included. Smoking is also found to save the Social Security program $1,519 per female smoker and $6,549 per male smoker for the same reason. The authors conclude that increases in the cigarette excise tax could be justified because current tax revenues do not cover all the costs imposed on the smoker's family members and society as a whole. However, they question whether the $206 billion Master Settlement Agreement can be justified and suggest that the answer depends in part on how the funds are used. This book, with its clear exposition and easy-to-follow organization, should serve as an excellent primer for readers who want to bring themselves up to speed on the state of knowledge about smoking-related costs. It will be useful for academics, policymakers, advocates, and those simply wishing to stay informed on this important health and policy issue. In the current era of shrinking state and federal budgets and tight competition for public health dollars, the framework that is laid out in this book will also be useful in evaluating other health-related programs to save dollars. Smokers are no doubt tired of hearing that smoking is bad for their health, but perhaps they will respond to arguments that smoking costs them and their family members dearly in other ways, too.Wendy Max, Ph.D.Copyright © 2005 Massachusetts Medical Society. All rights reserved. The New England Journal of Medicine is a registered trademark of the MMS.--This text refers to theHardcoveredition.