Manipulating Economic Policy Effectively Reduces Cigarette Consumption

“Everybody else’s tobacco is poisonous. Lucky Stikes’…is toasted.” – Don Draper

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Source: http://spacecoastdaily.com/wp-content/uploads/2012/04/don-draper-mad-men-10350-1920×1200-2.jpg

The economics regarding cigarettes is a rich subject for analysis, as recent studies have yielded intriguing information regarding its consumption. In general, over the past 50 years cigarette consumption in the United States has consistently declined (“Federal Trade Commission”). But while this may be the case, in order to further promote general health the analysis of cigarette consumption is still an important concern. For one, the statistics on cigarette consumption among minors has produced mixed results. While the consumption of cigarettes among teens has fallen nationally, an increase in electronic cigarettes has been seen (Tavernise). As a result, economists must be devoted to understand how changing economic policy can influence the consumption of cigarettes, and ultimately how it influences other substances. But for the most part, recent surveys have yielded positive and informative results.  An increase in tax on cigarettes significantly reduces consumption among teenagers (“Center on Budget”). And as a bonus, economists have also learned this economic policy reduces consumption of cigarettes among people of low income. Overall, economic policy on cigarettes has reduced consumption, and also the use of other substances; however, economists should still keep a watchful eye on consumption of harmful drugs. And although cigarette consumption has declined nationally, global consumption has increased (“Global Cigarette Consumption”).

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Source: http://www.ftc.gov/sites/default/files/documents/reports/federal-trade-commission-cigarette-report-2011/130521cigarettereport.pdf

First and foremost, the consumption of cigarettes and substances among young people concerns economists because economists know a healthy workforce promotes productivity; furthermore, the health of the youthful population remains to be a valuable investment, as it will also promote a productive workforce in the future. Thus a rise in the consumption of possibly dangerous e-cigarettes as a result of tax policy must concern economists. According to a recent federal study, the use of cigarettes among teens has declined, but their use of electronic cigarettes has increased (Tavernise). The article states a study surveyed “more than 41,000 students from 377 public and private schools” (Tavernise). The data extracted from this survey is worrisome, as complete information and exact health risks of electronic cigarettes are not known. According to the survey,

…17 percent of 12th graders reported using an e-cigarette in the last month, compared with 13.6 percent who reported having a traditional cigarette. Among 10th graders, the reported use of e-cigarettes was 16 percent, compared with 7 percent for cigarettes. And among eighth graders, reported e-cigarette use was 8.7 percent, compared with just 4 percent who said they had smoked a cigarette in the last month (Tavernise).

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Source: http://www.nytimes.com/2014/12/17/science/national-institute-on-drug-abuse-e-cigarette-study.html

While a decline in cigarette consumption among teens may be a result of economic tax policy, economists are now obligated to be concerned about e-cigarettes. The dangers of e-cigarettes could very well harm productivity and the economy by harming teenagers. On the bright side, economists can be proud to observe that an increase in tax on cigarettes reduces tradition consumption among teens, and adults with low-income (“Center on Budget”).

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Source: http://www.cbpp.org/cms/?fa=view&id=3978

By the same logic, economists can view the declined use of alcohol and other substances from this tax policy as a great economic gain. A new study conducted by The Washington School of Medicine states, “the same 10 percent cigarette price increase also leads to a 1 percent decrease in alcohol consumption (“Want People to Drink Less?”). If an increase in tax on cigarettes reduces alcohol consumption, economists essentially achieve two aims from this policy. Both alcohol and cigarettes are leading causes of death among Americans annually (“Want People to Drink Less?”). Therefore, reducing alcohol consumption, like cigarettes, promotes a healthy workforce. Finally, his data suggests that cigarettes and alcohol may be complements. If this is the case, economists will also gain valuable insight for future economic policies.

It is clear that raising the tax on cigarettes both reduces consumption of the product and other substances. Since the youth are both a valuable and fragile asset to our economy, this tax policy ultimately promotes productivity; in addition, the reduction of cigarette consumption among low income workers also supports a healthy, productive workforce. Unfortunately, it is in economists best interest to monitor electronic cigarettes, as they may prove to be dangerous substitutes for traditional cigarettes. In conclusion, his tax on cigarettes has proven to benefit the low-income population of the United States. Therefore, it may be an effective method to implement in low-income countries in order to reduce global consumption.

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Source: http://www.seattletimes.com/seattle-news/global-cigarette-consumption-number-of-smokers-climbing/.

Works Cited
“Center on Budget and Policy Priorities.” Higher Tobacco Taxes Can Improve Health and Raise Revenue —. N.p., n.d. Web. 20 Feb. 2015.
Doughton, Sandi. “Global Cigarette Consumption, Number of Smokers Climbing.” The Seattle Times. N.p., 08 Jan. 2014. Web. 20 Feb. 2015.
“Economic Facts About U.S. Tobacco Production and Use.” Centers for Disease Control and Prevention. Centers for Disease Control and Prevention, 06 Feb. 2014. Web. 19 Feb. 2015.
“Federal Trade Commission Cigarette Report for 2011.” (2013): n. pag. Web. 19 Feb. 2015.
“Global Cigarette Consumption, Number of Smokers Climbing.” The Seattle Times. N.p., 08 Jan. 2014. Web. 22 Feb. 2015.
“16 Brilliant Marketing Quotes From Don Draper (Infographic).” Inc.com. N.p., n.d. Web. 23 Feb. 2015.
Tavernise, Sabrina. “E-Cigarettes Top Smoking Among Youths, Study Says.” The New York Times. The New York Times, 16 Dec. 2014. Web. 19 Feb. 2015.
“Teen Prescription Opioid Abuse, Cigarette, and Alcohol Use Trends down.” Teen Prescription Opioid Abuse, Cigarette, and Alcohol Use Trends down. N.p., n.d. Web. 22 Feb. 2015.
“Want People to Drink Less? Make Their Cigarettes More Expensive.” Washington Post. The Washington Post, n.d. Web. 19 Feb. 2015.
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2 thoughts on “Manipulating Economic Policy Effectively Reduces Cigarette Consumption

  1. Great article. So the government’s taxes help regulate cigarette consumption. Does the government also impose a price floor for cigarettes? And would that effect consumption too?

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  2. This is a very interesting outcome that a increase in the tax of cigarettes could lead to a relative decrease in the consumption of alcohols. Could you expand on how it came out to be that way? And also don’t you think that this method of taxing cigarettes to reduce the consumption among teens themselves actually backlashes in that it just reverts them to the choice of e-cigarettes? In the latter case, there is instead no gain at all.

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