Sarah Kliff has a post on a new book After Tobacco: What Would Happen if Americans Stopped Smoking (by Peter Bearman, Kathryn Neckerman and Leslie Wright; Coumbia Univ. Press, 2011). I haven’t read the book but will try and get to it soon. Kliff highlights a few of the outcomes in a post-Tobacco world that may seem counterintuitive to some:
The economic effect on public programs, however, would be more of a mixed bag. States’ Medicaid costs would noticeably decrease: lower-income populations have higher rates of smoking and the negative health outcomes that follow. But states would also lose revenue from cigarette excise taxes, which amounted to $13.75 billion in 2006. If Americans stopped smoking altogether, states could see a 1.4 percent decrease in revenue, according to a chapter from Hunter College’s Howard Chernick.
A similar, spilt-effect would be true for Social Security. With Americans living longer, Social Security would bear the increased cost of supporting people for a longer time. But those costs are slightly offset from an increase in healthy workers, who “tend to earn more and retire later,” leading to higher contributions. On balance, “After Tobacco” estimates the end of smoking means a slight, 1.58 percent increase in Social Security outlays.
We found similar cross subsidies in The Price of Smoking that I have blogged about. I will be most interested in the methods they used and hope to blog about them in the next few weeks.
