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Friday, March 31, 2006

Did Colorado snuff out smokers’ rights, or were non-smokers’ rights recognized?

http://www.huntingtonnews.net/health/060327-shns-smoking.html

http://www.colorado.gov/governor/press/march06/smokingban.html

Colorado House Bill 1175 was signed into law by Gov. Owens this week essentially bans smoking in any building open to the public (and even many that aren’t open). It is my opinion that under all three of our normative frameworks (equity, efficiency, and liberty) this ban will be considered acceptable.

Equity

First the easiest of the three: equity. I define equity as: equality of opportunity. Since this ban is applied to all citizens of Colorado I see no objection under this normative framework.

Efficiency

Now for a slightly harder justification: efficiency. For efficiency there needs to be a potential Pareto improvement for a public policy to be viewed as acceptable. According Gov. Owens’ press release, “In Colorado, the costs attributable to secondhand smoke are estimated to be $180 million annually for direct medical expenses and $19 million for loss of life.” While these figures aren’t quite proper to be used directly in economic BCA they do show that there are benefits to the ban that—by itself—would move Colorado citizens to a higher indifference curve.

Obviously though smokers will bear a cost to this ban that—again, by itself—will their lower utility. But this isn’t the end of the story.

According to an article on huntingtonnews.net, “evidence from the 12 states with smoking bans, as well as the many U.S. cities with widespread bans, indicates that along with fewer burning eyes and hacking coughs comes an uptick in tax revenues from bars and restaurants.” This seems to disprove the common belief that smoking bans will reduce the demand for bars and restaurants in America. As the huntingtonnews.net article reports bar and restaurant revenues in Ireland declined after a ban there was enacted, New York City saw an 8.7% increase in tax revenue the year after their ban was enacted. Also huntingtonnews.net reports, “the ZagatSurvey for New York restaurants indicated that 23 percent of respondents dined out more often after the ban, while just 4 percent of respondents said they were dining out less.”

All this boils down to that people like non-smoking places more than smoke filled ones. Does this demonstrate a potential Pareto improvement? Without more accurate data a conclusive position is impossible, but from this evidence I believe that Colorado’s smoking ban is a potential Pareto improvement.

Liberty

Now for the final framework: liberty. The opponents of the smoking ban argue that it is the smokers’ right to smoke if they wish that is being violated by such smoking bans. Some also argue that business owners (and the like) have their rights violated by the government not allowing smokers to light up if they wish.

The proponents of the bans, while rarely if ever in any proper economic form, argue that second-hand smoke is a violation of the rights of others. If a smoker lights up, much like a polluting firm, they emit pollution that is forced upon others. Arguments can be attempted that people could avoid smoking places, but this doesn’t change the fact that any time someone smokes they are coercing anyone around them to suffer their smoke. Thus, when someone smokes they are harming those around them which, and that is a case for corrective action. As for the argument of the businesses, since businesses accept both smokers and non-smokers into their establishment the firms are indifferent to the smoke. Even if business is enhanced by allowing smoking, since that act is unacceptable under liberty, any subsequent effects of the smoking ban would be irrelevant. Such complaints would be like a fence arguing that the police harm their business by arresting thieves.

Since some corrective action is necessary, is a ban the most appropriate method of correction? The smokers do have a claim that this ban will prevent them from smoking even if no one would be harmed, but other policies (such as establishing a smoking police) would be far to costly than this ban. Try to imagine an IRS like agency running around taxing smokers; certainly a freighting thought. That is to say, a smoking ban is the least costly method to correct the harm done by smoking.

Who knew that the government could actually do something actually defendable under our normative frameworks? I think that Colorado’s smoking ban is a good demonstration of this, but would like to know what others think.


Comments:
". . . but from this evidence I believe that Colorado’s smoking ban is a potential Pareto improvement."

Caution, there may be evidence of externality abuse in the posted analysis.

You do note that the numbers you rely on for "evidence" are probably not numbers for exactly what you would like to have numbers for. You should take this as a warning to yourself. My suggestion is that the numbers you relate tell us very little about potential pareto improvements. Specifically the "costs" are expenditures, and not areas under marginal cost curves, nor are they marginal costs. The numbers about lives are surely not estimates of the value of a statistical life, and therefore they tell us nothing of relevance for an efficiency analysis.

I suggest you should be skeptical of your efficiency conclusion for other reasons. I think it is very unlikely that the efficient external cost from smoking would mean zero external cost. Would you agree? If you agree, then efficiency suggests that any public policy that reduces external cost from where it is in the status quo to zero is quite unlikely to be consistent with a potential pareto improvement. Further, we know from conceptual analysis that in general we should not expect regulation (and in this case a prohibition) to be the efficient policy for a negative externality. Instead we would find an efficient policy as one that internalizes the external cost (not one that prohibits the external cost).

Now, for me, the most interesting aspect of your efficiency analysis is your reference to studies that revenues increased after the ban in other communities. Interesting, yes, but you don't seem to get right to the heart of what you must be asserting with this "evidence." That is, if indeed you expect the smoking ban to be a potential pareto improvement, then I think you must think there is a market failure without the smoking ban. What would that market failure be? Your evidence of increased revenue seems to suggest you think there must be a market failure because of the nature of the market's reponse to the ban. But you don't connect the dots (to borrow from the President), and tell us specifically what that source of market failure would be.
 
". . . Thus, when someone smokes they are harming those around them which, and that is a case for corrective action."

and

". . . a smoking ban is the least costly method to correct the harm done by smoking."

I'm not with you on the liberty analysis. In the first quote I note here, you refer to a corrective action, when instead I think liberty implies a PROTECTIVE action. Then in the second quote you discuss the best corrective action is that which has less cost. By considering cost, you have really added an additional normative criterion to your analysis. It seems to me you couldn't simply argue from liberty alone, but had to add to that a concern for least cost.

Most importantly, it seems to me, is that your analysis too easily brushes aside my property ownership in my restaurant. You do not have the right to enter my home or my restaurant or my automobile. Nor do I have the right to compel you to enter my restaurant. I will allow you to enter my restaurant as long as you agree to abide by my rules for the use of my property. My rules include that people can smoke 'em if they've got 'em. Enter my restuarant and agree to these rules and you can stay. If you enter my restaurant, then complain to one of my other customers that they are smoking, then I will have you thrown out of my restaurant. On the other hand, if you want to offer to may one of my other customers not to smoke, then I will let you stay as long as you offer to pay enough that they will stop. I say this is whether the liberty analysis rests.

One more point. Since you are in my restaurant voluntarily, you cannot claim to hold a right not to breathe tobacco smoke. Suppose, I had a restaurant with several people smoking, and then I went out to the sidewalk in front of my restaurant with my shotgun. I pointed my shotgun at the first passerby, which was you. I told you to come on into my restaurant, and as a result you collasped in a coughing heap on the floor in front of my bar. Now you've been coerced and you've been harmed. But the harm is not due to the smokers in my restaurant. The harm is caused by me coercing your into my restaurant.

I suggest the liberty analysis is that neither you nor the government can tell me what the rules for the use of my restaurant are to be.
 
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