Why $10 for a Pack of Cigs Is Good Value
My first cigarette was a Pall Mall -- no filter -- given to me by some older, decidedly cooler boys on the slope of a Colorado mountain when I was 13 or 14. AC/DC's "Back in Black" was playing loudly in the background, the sun shone, and in addition to gagging on the smoke and hacking up a chunk of trachea, I got high as a kite from that wonderful toxic brew of addictive chemicals and additives that make smoking such a terrible and tantalizing pleasure.
In my later teen years, I'd have an abundance of cool -- too much, according to teachers, school counselors and parents -- but at that age, I was an awkward kid. I remember those older, cooler boys inviting me to have a smoke with them as the first time I ever felt hip -- the first time I felt accepted into a desirable clique.
I was, of course, internalizing decades of "lifestyle" advertising designed to associate sophistication and sex appeal with a smelly, dangerous product.
At that point, I was clearly the victim of an unscrupulous industry that has used subterfuge, dishonest advertising and, at times, political corruption to preserve a profit margin on the backs of approximately 400,000 dead Americans every year.
But in the intervening years, I have been capable of quitting, and have tried and tried repeatedly, only to succumb, out of weakness, to my addiction. Along the way, I've known in great detail how much damage I was doing to my lungs, heart and cardiovascular system.
So, during the past 25 or so years, smoking has been a personal, if highly destructive, choice for which I -- and society -- will likely pay a heavy price down the road.
As such, the politics of tobacco dovetails neatly with various ideological perspectives. Broadly speaking, the "left" has long pushed for greater regulation of the tobacco industry in order to protect consumers, comprehensive efforts to get people to quit and steep taxes to discourage smoking.
And, as right-wing talker Rush Limbaugh articulated in a recent rant, tobacco is a perfectly legal product and smoking a "lifestyle choice," so banning it -- or imposing stiff taxes on its users -- also infringes on our fundamental freedom to do stupid, self-destructive things.
That both sides of the divide have a legitimate argument may help explain the schizoid nature of the politics of tobacco. It's a deadly substance, the cultivation of which has a long tradition in America and provides a livelihood for tens of thousands of growers; it's highly addictive, yet as a society we haven't made a move to ban it as we have less-harmful substances like marijuana (which is also the most valuable cash crop in the country, according to estimates).
And while society has increasingly come to stigmatize smokers rather than view them as we generally do those addicted to other substances -- as people suffering from a disease -- the tobacco industry has successfully pushed 29 states and the District of Columbia to pass "smoker protection" laws that elevate tobacco users to the same kind of protected status as the elderly, the disabled and minority groups.
But it's undeniable that the larger trend is toward more industry regulation and greater restrictions on smoking and more social isolation for those who continue to smoke.
Reporter Matt Cooper, a veteran of the "tobacco wars" of the 1990s, said of Big Tobacco's waning ability to steer policy debates, "it's hard to believe how much has changed" in just a few short years, arguing that the changing landscape is fueled in large part by "the continued ostracism of smokers from public life" as cities and public venues enacted dozens of bans on smoking that would have seemed unimaginable just a generation previously.
Just this year -- somewhat lost amid two hot wars, an economic collapse on a scale not seen for generations and noisy fights over top-tier issues like health care -- the tobacco industry faced two significant setbacks.
In June, Obama signed a bill that would allow the Food and Drug Administration to regulate their product. Under the new law, regulators will have the authority to regulate tobacco advertising, cigarette companies will no longer be able to peddle their wares as "light," "low tar" or "mild," but will have to list all the toxic crap that their products contain.
And cigarette packs in the U.S. will soon feature the same large and gaudy warnings as those sold in countries such as Canada.
With the flourish of a pen, the legislation ended a decades-long fight that began when Big Tobacco successfully lobbied to have its addictive substance excluded from the 1906 Food and Drug Law that created the FDA.
More significant still was a large increase in federal cigarette taxes passed in February -- from 39 cents to $1.01 per pack. Raising taxes on cigarettes is politically popular and is a proven means of reducing tobacco consumption.
Big Tobacco represents a classic case of an industry that makes a private profit while pushing deep and negative "externalities" onto society as a whole.
According to the Centers for Disease Control, the total costs of smoking borne by society -- including direct health care costs and lost productivity -- amount to over $10 for every pack of cigarettes sold in America (PDF).
And while tobacco use has been in decline since the surgeon general's landmark finding in 1964 that smoking causes cancer, it's still the leading cause of preventable death in the U.S.
In 1964, more than 40 percent of Americans over the age of 18 smoked, but by the late 1980s that number had decreased to 27 percent. Since then, though, the decline has continued at a more gradual rate; today, just over 1 in 5 adults continue to light up.
According to the surgeon general, a holistic, multifaceted approach to getting people to kick the habit works best. But as far as individual policies go, the one that has proved the most effective is raising taxes on tobacco products.
Nationally, while a number of factors have contributed to the decrease in tobacco's popularity, the use of cigarettes correlates almost perfectly with the price of a pack of smokes.
The tobacco industry ostensibly opposes raising taxes on tobacco not because it hurts their bottom line, but on ideological grounds -- they oppose raising the tax burden on adults who consume a perfectly legal product. But in private, industry executives have made it quite clear what their issue with higher cigarette taxes really is.
In internal documents, Phillip Morris executives wrote, "Of all the concerns, there is one -- taxation -- that alarms us the most. While marketing restrictions and public and passive smoking [restrictions] do depress volume, in our experience, taxation depresses it much more severely."
RJ Reynolds noted, "If prices were 10 percent higher, 12-17 incidence [smoking among young teens] would be 11.9 percent lower." And in an SEC filing, Lorillard Tobacco, another industry giant, wrote, "We believe that increases in excise and similar taxes have had an adverse impact on sales of cigarettes. In addition, we believe that future increases, the extent of which cannot be predicted, could result in further volume declines for the cigarette industry, including Lorillard Tobacco."
It's worth noting that young people -- adults age 18-24 -- are the most likely to smoke cigarettes. In part, that's a result of a shift in advertising strategy by the tobacco industry in recent years. According to the American Heart Association:
The tobacco industry has long targeted young people with its cigarette advertising and promotional campaigns. … In the November 1998 multistate tobacco settlement, the major tobacco companies promised not to "take any action, directly or indirectly, to target youth … in the advertising, promotion or marketing of tobacco products." But studies since then have shown that tobacco-industry marketing has reached record levels since the settlement, with much of the increase due to strategies aimed at young people.
The consensus among economists is that a 10 percent increase in the price of a pack of smokes results in a decrease of between 3-5 percent in smokers. But young people are even more sensitive to price increases than the population as a whole. As the graphic below illustrates, youth smoking declined dramatically as cigarette prices rose from the early 1980s through 2003. But between 2003-2005, a modest decrease in average cigarette prices correlated with an upturn in youth smoking.
Cigarette taxes are also a major source of revenue for states' public health, education and smoking-cessation programs. Tobacco lobbyists claim that they are pointless because when prices exceed a certain point, widespread smuggling and black-market sales pop up, but the hard data don't bear that out. Of the 11 states that raised their cigarette taxes in 2007 and the first months of 2008, all saw significant increases in cigarette-tax revenues -- a 41.2 percent increase on average (PDF).
It is true, of course, that tobacco taxes are deeply regressive. If you're wealthy, a few extra bucks to maintain an addictive habit isn't a great hardship, but if you live below the poverty line it can have a huge impact.
But it's also the case that cigarette use varies quite a bit among different groups of Americans. According to the CDC, people with limited education are the most likely to smoke -- almost half of those with a GED smoke cigarettes, compared to fewer than 1 in 14 recipients of a graduate degree. It also runs across class lines -- smoking rates for those living beneath the poverty line are 50 percent higher than those above it. And men are more likely to smoke than women.
And the classic rationale for "sin taxes" is that they discourage the use of something detrimental without banning it outright and, as such, the beneficiaries tend to be the exact groups who have the highest prevalence of smoking.
All of this is pretty clear from a policy perspective. Personally, as someone who has fought against a demon sticky with nicotine for 25 years, I found that the only time I was able to quit and stay quit for a significant period of time was when I lived in New York City, and cigarettes there passed $10 (and sometimes even $11) a pack.
Public policy must at times save people from themselves -- from their "personal choices" when those choices place a huge burden on society. That's why, despite the hit to my wallet, you can count me among the large majority of Americans -- Democrats, Republicans and independents alike -- who think $10 for a pack of smokes is a perfectly reasonable price to pay.
And maybe we should go ahead and make it $15 bucks a pack.