Edward L. Glaeser

Raise cigarette taxes — and skip the ugly photos

By Edward L. Glaeser
June 30, 2011

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LAST WEEK, the US Food and Drug Administration presented nine gruesome pictures that will soon cover the top half of cigarette packages. One image shows diseased lungs and teeth; another shows a man exhaling smoke through a hole in his neck. These pictures make smoking less pleasant, just as higher cigarette taxes do. But while the latter generates useful public revenue, these images are essentially revenue-less taxes.

We can tax behavior in lots of ways — with social stigma or painful pictures — but most of the time, the best taxes involve dollars and cents.

For centuries, America passionately debated its indulgences, from demon rum to sugary colas. For public health advocates, the fight against cigarettes is a crusade that demands any step that can reduce smoking. For the ardent libertarian, any compromise on personal freedom is a step towards serfdom.

Yet wise policy rarely emerges intact from the hot flames of moral passion. Wise policy starts with well-justified objectives, and trades costs against benefits.

Paternalism, the view that government can improve adults’ lives better by making decisions for them, is a poor rationale for policing pleasures; though people err in their private decisions — me more than most — governments err, too. A better reason for policing certain pleasures is when they impose external costs on third parties, like the children that Carrie Nation was trying to protect from abusive drunks. Second-hand smoke can be unpleasant. Smokers don’t bear all health-care costs. Most importantly, every human is part of a dense social network, where every illness and death causes hardship and pain to friends and relatives. The social costs of self-destructive behavior easily justify some public policy response.

But absolute prohibition is no more practical for tobacco or sugary soda than it was for alcohol, nor is it desirable. Many of us take more than enough pleasure in cabernet and Coca-Cola and cigars to offset the costs, including those borne by third parties. Good policy doesn’t ban behavior; it makes people pay for the social costs of their actions.

Sin taxes that account for those social costs are the time-honored means of getting better behavior, and raising some revenues in the bargain. The right cigarette tax must weigh the benefits of less smoking and more revenues against the suffering felt by smokers who pay the tax. After all, smokers are people too.

Even though mandating ugly smoke-related images doesn’t take money from smokers’ pockets, it too imposes a cost that can be measured. An article by James Thrasher and colleagues in the journal Addictive Behaviors reports the results of auctioning off packs of Marlboro Reds, some with text warnings (such as “smoking causes cancer’’) and some with images of a cancerous mass on a man’s throat. Smokers were so put off by the pictures that they were only willing to pay 17 percent less for the packs with the awful image than for the text-only packs.

For these smokers, the horrible image is like imposing a new 17-percent cigarette tax.

These pictures aren’t providing new information. Economist W. Kip Viscusi finds that, if anything, smokers typically overestimate the health risks of smoking. Graphic images induce disgust, not reasoned thought.

Smoking reduction could be better achieved by raising taxes. Compare the images against a tax designed to have an equal negative impact on the smoking experience. Both will reduce smoking by the same amount. Both will impose equivalent costs on smokers, who either have to pay more for cigarettes or put up with ugly pictures.

But while the tax raises revenue, which can be put to useful purposes, the image does not.

Consider a different choice: whether to punish people for double parking with either a $100 fine or by imposing $100 worth of unproductive emotional discomfort on the parkers. The $100 fine is unambiguously better, because it can be put to useful public purposes. The unrewarding suffering is just value lost.

However well-intended, the FDA’s cigarette images are also just unproductive emotional discomfort. Let’s stick with taxes.

Edward L. Glaeser, a professor of economics at Harvard University, is director of the Rappaport Institute for Greater Boston. His column appears regularly in the Globe.