Do smokers think of those around them?

We’ve written a lot on this blog about taxing cigarettes. The usual arguments focus on health costs and potential ‘internalities’. When you look at the calculated costs of these things you usually get a number much smaller than the tax rate on a pack of cigarettes. Today it was suggested to me that cigarettes are nonetheless undertaxed in NZ. That’s because those calculations don’t include the statistical value of lives lost from smoking. If the value that people place on a life were taken into account at around $4m/life the cost of smoking would be far higher than the tax imposed. It would then take into account the harm to all those around the smoker who would be devastated at the loss of their life.

I’ve been fascinated with the new starbucks dabuccino and I really hope that vaping it will produce less health issues. I haven’t had a chance to think it over in detail so I’m interested to know what you think about the argument. While I don’t have any numbers to back anything up, my initial thoughts are:

  • Smokers’ lives aren’t usually all that much shorter than anyone else’s. It’s not like car accidents which claim people of all ages. That makes it difficult to apply the same number, unless we have an age adjusted figure available.
  • Smokers do care about those around them so they’ll take into account the feelings of others when they make the decision to smoke. Some of the cost to those around them is thus internalised.
  • People close to the smoker have an opportunity to directly bargain with them over their cigarette consumption. Perhaps government intervention isn’t needed to solve this problem.
  • VSL calculations are usually done using willingness to pay to avoid harm. That approach puts a number on how much someone values their own life. Does that $4m figure represent the valuation of one’s own or someone else’s life? I imagine willingness-to-pay to avert the death of others is significantly lower. In fact, given people’s willingness to pay to save the lives of blameless and starving African children, I imagine they aren’t going to pay a whole lot to save someone with a pack-a-day habit.

I don’t know how big this number is, but it does sound kinda significant even given my reservations. So why isn’t it included in the calculations of people like Viscusi, Gruber and Koszegi? I’m sure there’s an obvious answer, but I don’t have it so I’m hoping your collective wisdom can help me out here 🙂

Reference: Pensacola Florida Long Term Disability Lawyer | Ortiz Law Firm.

Portugal: Lessons on Drugs and Statisitics

The Liberal Conspiracy has interesting article on the drug decriminalisation in Portugal. Two highlights for me.

The opening paragraph:

The right predicted Bad Things: Drug use would explode, tourists would travel from far and wide to get high on the streets of Lisbon, law and order would collapse, and people would start riding around in modified cars and fighting in Thunderdomes

This just made me laugh:)

Now what made me cringe was the stats from a Cato paper looking at Portugal:

Prevalence rates for the 15–24 age group have increased only very slightly, whereas the rates for the critical 15–19 age group—critical because such a substantial number of young citizens begin drug usage during these years—have actually decreased in absolute terms since decriminalization.

Perhaps most strikingly, while prevalence rates for the period from 1999 to 2005, for the 16–18 age group, increased somewhat for cannabis (9.4 to 15.1 percent) and for drugs generally (12.3 to 17.7 percent), the prevalence rate decreased during that same period for heroin (2.5 to 1.8 percent), the substance that Portuguese drug officials believed was far and away the most socially destructive.

If you feel confused after reading that paragraph don’t worry. The Liberal Conspiracy’s description of this passage hit the  spot for me:

What the above basically demonstrates is that if you cherry-pick the right start years and end years for an age-group, you can get almost any result you want

Lies, damned lies and statistics….

Bicycle helmet laws kill

I’ve previously suggested that mandatory helmet laws are bad for the environment. Well new research suggests that they’re actually bad for health outcomes, too:

A model is developed which permits the quantitative evaluation of the benefit of bicycle helmet laws. The efficacy of the law is evaluated in terms of the percentage drop in bicycling, the percentage increase in the cost of an accident when not wearing a helmet, and a quantity here called the “bicycling beta.”

Empirical estimates using US data suggests the strictly health impact of a US wide helmet law would cost around $5 billion per annum. In the UK and The Netherlands the net health costs are estimated to be $0.4 and $1.9 billion, respectively.

That’s a LOT of money and that lot of money in net health costs could save a LOT of lives. If there’s a net social health cost to mandatory helmet laws then they’re hurting more people than they help. That’s a good reason not to have them if you care about saving lives, or minimising harm, or maximising welfare. Read more

Tony Veitch and the economics of suicide

The Herald are reporting that Tony Veitch has (once again) attempted to take his life. The story is very sad but did get me thinking about whether suicide is ever a rational response.

There is some literature (here, here and here) on this very topic. The most interesting thing for me was that an attempt at suicide can be rational so long as the attempt is not successful. A failed attempt tends to significantly increase income (by 20.3% on average, relative to those who consider suicide but do not make an attempt) as more resources, such as healthcare and affection, are made available to the person who made the attempt. The more serious the attempt, the greater is the impact on income (36.3% on average for so-called ‘hard-suicide’ attempts).

This economic approach to suicide runs counter to the traditional view that suicide occurs at a fragile point in time when someone is acting irrationally.

In the instance of Tony Veitch, it is difficult to see how a positive income effect would be gained from his numerous attempts at suicide, given his broadcasting career has been ruined by the case. However, this might be underplaying the positive, non-financial, effect that a ‘cry for help’ can have on an individual. On the other hand, Tony Veitch could simply be acting irrationally.

Whether Tony Veitch is acting rationally or irrationally, one thing is certain – the case is extremely tragic.

Drug companies vs doctors

Ezra Klein reports that

A review of seventy-four clinical trials of antidepressants found that thirty-seven of thirty-eight positive studies were published. Of the thirty-six negative studies, thirty-three were either not published or published in a form that implied a positive outcome. … To a doctor reading the published literature, 94% of the trials conducted were positive. In reality, 51% were positive.

He concludes that “[i]f the pharmaceutical companies will not fund research, then someone else must.” I’m not so sure. Read more

Do we get what we pay for in healthcare?

I said earlier that we might not always want to trust the people with the best track record when we go off the beaten path. Sometimes the tools that work in one environment aren’t the best to use when the environment changes and what we really need are experts in developing tools.

A related post on OB points to another reason why trusting track records isn’t always best.

Call it the best-kept secret in Massachusetts medicine: Health insurance companies pay a handful of hospitals far more for the same work even when there is no evidence that the higher-priced care produces healthier patients.

We might naively use this as evidence that less prestigious hospitals actually offer better care. However, another possible interpretation is that the toughest cases go to the most prestigious hospitals and, despite the higher standard of care, they end up with a higher mortality rate. Read more