Are Cigarettes Worth the Money? Deconstructing the Two Main Economic Arguments about Tobacco

Though the harmful physical effects of cigarettes have become universal knowledge, more debated is how smoking and the tobacco industry affect the economy. Tobacco lobbyists laud how tobacco contributes to American employment, helps support the advertising industry, and provides a steady and demanded product to stores and tobacco merchants. Conversely, critics will cite all of the medical expenses incurred as a result of cancer, lost work time to cigarette breaks, and loss of productivity due to health issues. Both sides provide strong arguments in their favor, and it often becomes difficult to see through the smoke of each side.

What is known for certain is that cigarettes have become a hot-topic issue for the American people. State and local governments have begun using “smoking bans” as a political tool during election season, ads from anti-tobacco organizations have begun running side-by-side with cigarette ads in major magazines, and tax hikes on cigarettes spark debate every time they’re proposed. With such passion guiding the debate, it’s worth it to take a step back and consider the situation objectively. Therefore, here is a breakdown of the two most common arguments about the economic impact of cigarettes. The final picture might not be as black and white as either side would have you believe.

Growing the Economy?

One of the tobacco industry’s go-to arguments in defense of themselves involve the claim that tobacco is a big provider for the economy and that without it, there would be a devastating loss of jobs and other ancillary effects, such as a blow to the advertising industry and farmers. The truth is that this is most likely a gross overstatement by the tobacco industry. While it is true that the tobacco industry has a rich history within the United States, having at one point played an economic role that was indispensable to the American economy, this has changed over the years.

The tobacco industry now employs roughly 1.6 million people, but only about a third of these are directly employed by tobacco, with the rest being individuals who either profit from tobacco or deal with them in other ways, such as by selling materials to tobacco. Further, through a decline in sales and increased mechanization of the process, employment within the industry continues to fall. Many tobacco critics have even argued that if all sales of cigarettes were to cease tomorrow, that the money used on cigarettes would simply go to benefit other areas of the economy since cigarette money is generally considered disposable.

However, even if the economy wouldn’t collapse in the event of the tobacco industry’s disappearance, it can’t be denied that it would leave a mark, with global revenues from tobacco in 2012 totaling $500 billion dollars. That’s an amount that would at least be felt in some corners of the world market.

Economic Cancer?

Tobacco critics are known for their aggressive stop-at-nothing advocacy in their fight against cigarettes, and where appealing to people’s health fails to convince, they have had to branch into other areas of reason. What has now become a major argument in their playbook is the argument that tobacco not only kills, but that it imposes massive burdens on the economy through medical bills for all of the cancer patients it causes. The reality is that the claim requires the fudging of some numbers and the omission of others in order to be accurate.

While it is true that a great deal of healthcare is spent on treating smoking-related cancer patients, it is also true that non-smokers are more likely to live into old age where they will require very costly end-of-life treatment. Essentially, living into old age can cost more than dying early from a quick cancer. If that sounds bizarre, that’s because it’s a relatively controversial benefit to the tobacco industry that many don’t like to hear – so much so that even the tobacco industry itself stopped publicizing the information, despite its validity.

However, there does exist some dispute over the exact numbers involved, and studies have emerged that produce differing results based on the use of other sets of data. For instance, by factoring in secondary illnesses that are caused or agitated by smoking – such as a prolonged flu caused by smoking – certain studies have concluded that the ultimate cost of cancer still balances out at a net loss to society. The problem is that even when considering these studies, the end result comes out to being modest at best, which still undermines the persuasive power of the tobacco critics’ claim, and what is now certain is that there is no longer a consensus over whether or not cigarette-related illness produces a net gain or loss on society.

Ultimately, both sides are guilty for exaggerating their respective cases about the economic impact of tobacco on the economy, and whether cigarettes burn holes in society’s pockets remains a matter of dispute. But what’s not disputed is that the numbers can’t account for the other kind of loss – the loss of an individual who died before their time due to smoking-related illness.

Kent Yuen is a writer for JW Surety Bonds, a surety company that is proud to sponsor a series of financial consumer education articles that help buyers make the right decisions.


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