Smoking out Leviathan

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Article Highlights

  • More and more, Americans support limits and taxes on smoking

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  • As taxes have gone up over decades, smoking has gone down

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  • [CHART]: Smoking taxes vs consumption in the U.S. over time

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This article appears in the August 19, 2013, issue of National Review.

Throughout most of his life, William F. Buckley Jr. was a strong supporter of the freedom to smoke. In a 2002 article, he wrote, “Perhaps tomorrow’s rules will say: Okay to smoke if you are located in a park, or desert, and the weathervane shows no wind at all, and no population centers to leeward. Then light up. And sing Land of the Free!” Late in life, however, after his wife, Pat, died, “technically from an infection, but manifestly, at least in part, from a body weakened by 60 years of nonstop smoking,” he admitted that, given the chance, he would forbid smoking in America, even against his “secular commitment to the free marketplace.”

As with so many other things, Americans have gradually caught up with Buckley’s view. Cigarette smoking has grown increasingly unpopular. Fully 22 percent of Americans support an outright ban on smoking, according to a recent Gallup poll. While policymakers have stopped short of that in the U.S., they have found numerous other ways to attack smoking. The most common method, of course, is taxation, which has increased sharply over the past few decades.

Supply-side Republicans have at times been willing to increase taxes on smoking in the belief that this will reduce that destructive behavior, and because the revenue allows reduction of other marginal tax rates. Democrats, who often seem to believe that marginal tax rates can be increased with impunity, have also been willing to punish smokers. Accordingly, there has been bipartisan anti-smoking sentiment to generate constant upward pressure on cigarette taxes.

The nearby chart compares cigarette-tax rates in the U.S. since 1980 with the consumption of cigarettes. The chart suggests that supply-side economics does a great job of describing recent patterns in smoking behavior: As taxes have made smoking more expensive, smoking has declined sharply.

This correlation is not, of course, proof. More convincing empirical evidence was recently presented in a study by economists Philip DeCicca, Donald Kenkel, Alan Mathios, Yoon Jeong-Shin, and Jae-Young Lim. The authors traced the impact of cigarette taxes on decisions to start or quit smoking. Since these taxes vary widely from state to state, and from year to year, the authors had an enormous amount of data to analyze in search of precise estimates of the impact of cigarette taxes on cigarette consumption.

Prior to the study, the conventional wisdom was that high taxes reduce cigarette smoking by discouraging young people, who rarely have much money, from acquiring the habit. The authors turned that conventional wisdom on its head: They found that cigarette taxes had virtually no effect on the likelihood that a young person would begin to smoke, but a very large and significant effect on the likelihood that a smoker would quit smoking. Intuitively, this makes sense, given that most youths probably start smoking with a borrowed cigarette, while the cumulative costs of high cigarette taxes would be a burden on a regular consumer.Love of a good smoke and the craving of nicotine may be ineradicable, but unwillingness to feed Leviathan’s ravenous appetite appears to loosen their grip.

-Kevin Hassett is the John G. Searle Senior Fellow and Director of Economic Policy Studies at AEI

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