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Smokers Are Not a Burden

by John Staddon
8 March 2022 3:28 PM

There follows a guest post by John Staddon, Professor of Psychology, and Professor of Biology and Neurobiology, Emeritus at Duke University, which is an extract from Chapter 4 of his book Unlucky Strike: Private Health and the Science, Law and Politics of Smoking.

I have discussed the morality of smoking, its supposed lethality, its addictiveness and its effects on nonsmokers. The evidence shows that if smoking is a sin it is a pretty venial one; nor is smoking as lethal as its critics charge and many smokers imagine. The health effects of passive smoke are almost impossible to measure. The best attempts have failed to find significant effects. 

This chapter deals with the most serious policy-related charge against smoking: that it costs non-smokers money – smoking has a Public Cost.  Smoking-related disease is “a profound burden on our national health care system”, wrote Judge Kessler. As we’ve seen, the National Socialists agreed (all those lost Volkswagens). “Smoking imposes a huge economic burden on society – currently up to 15% of total healthcare costs in developed countries,” says an article in the BMJ in 2004.  The case seems unarguable. A substantial fraction of smokers die of smoking-related illnesses. Treating illness, especially if the treatment is protracted and often ineffective, as it is with COPD and many cancers, is always expensive. 

But “obvious” is not always “correct.” The smoking-costs-us folk seem to forget (brace yourself!) that we all die, even non-smokers. As the bumper sticker reminds us: “Eat right, exercise – die anyway.” The facts about the health-care cost of smoking are in fact the opposite of the common preconception. For the 24-50 age range, smokers cost a bit more, thereafter they cost quite a bit less because smokers die a bit earlier than non-smokers. Overall “smoking actually saved the Medicare program money, $2,800 per male smoker aged 24 and $600 per female”, concluded Sloan and colleagues from a database up to 2002. Data gathered since, which I discuss at more length in a moment, confirm this conclusion: smokers save society on health-care costs. Silberberg, using a different set of data, concludes similarly in the Appendix.

What matters for the cost argument is the manner of our dying: when do we die? And how long and costly is the process? The cost-saving early death of smokers was pointed out by the defense – Philip Morris Co. – in a 1998 Minnesota case. Cleverly disparaged by the plaintiffs as the “death-credit” argument, relevant evidence was specifically excluded by the judge in the case, letting the plaintiffs’ uncontested claim stand. I return to the legal issues in later chapters. 

The costs of health care for the elderly in the last years of life are always much the highest. One study, for example, found that: “From 1992 to 1996, mean annual medical expenditures (1996 dollars) for persons aged 65 and older were $37,581 during the last year of life versus $7,365 for non-terminal years.” Hence, dying of an acute – brief – condition is usually less costly than hanging on with some disabling but eventually terminal ailment. As we saw with the two forms of malaria in Colombia, the more lethal, but rapidly fatal, form was less costly to the country than the less lethal, chronic form.

So it is with smoking. In the year 2000, Philip Morris, recognising that it might not be considered the most credible investigator, asked the Arthur D. Little company to do a study for the Czech Republic on the cost to the state of smoking. The conclusion: smoking, because of early mortality and tax revenue, represents a net benefit amounting to about $1,227 per smoker. 

Anti-smoking activists expressed horror at this finding.  One commented: “Even if it were true that smokers dying young would save money for the economy, it’s a real scary logic on which to base policy.”  Well, yes – unless attacks on smokers are justified by faulty economics, to which accurate economics is the only adequate response.  And yes, if the Government were to use economic arguments to facilitate, mandate or otherwise encourage smoking. Logic played no part in this debate. The reaction to the Czech study was so violent, that Philip Morris felt it had to issue a grovelling apology the next year. But no one found anything wrong with the science. 

A 2008 study to which anti-smokers have not yet expressed horror – perhaps because it doesn’t have “smoking” in the title – is by a group of Dutch investigators. This seems to be the best available study on the actual costs of smoking to society. The investigators’ aim was to see “whether this risk factor [obesity or smoking] primarily causes relatively cheap lethal diseases or rather expensive chronic ones”.  The study compared obese people, smokers and what they term a “healthy-living” cohort. They conclude: “The high medical costs of smoking-related diseases are more than offset by lower survival of smokers.” They used Dutch medical costs for their estimate, but since per-capita U.S. medical costs almost twice Dutch costs, their results are likely to apply even more strongly to the U.S.  

Their conclusion is that although smokers have a shorter life expectancy than the other two groups (77.4 years vs. 79.9 for the obese and 84.4 for the healthy-livers, all at age 20), their lifetime health-care costs are in fact lower. In summary (emphases added):

In this study we have shown that, although obese people induce high medical costs during their lives, their lifetime health-care costs are lower than those of healthy-living people but higher than those of smokers…. The underlying mechanism is that there is a substitution of inexpensive, lethal diseases toward less lethal, and therefore more costly, diseases.

Dying young is always a cost to society. A family may be left bereft. Years of potentially productive life are lost (economists call this opportunity cost). Traffic deaths, gun deaths, deaths from hazardous activities such as rock-climbing and motorcycling and deaths from infectious disease in the prime of life, are especially costly to society at large. But the fact is – discouraging for smokers but not necessarily for other people – smokers who die of smoking-related ailments die (from a cost point of view) at just about the right time, right after retirement age. The opportunity cost for society is minimal or even negative because age of death is around the time the smoker would have ceased productive work anyway and after his or her children are independent. (And their children’s inheritance will probably be larger than non-smokers’, because they have not had as much of a chance to spend it down!)

Smokers may, as some critics argue, be less efficient than non-smokers while on the job – going outside for a drag rather than working, for example. But some of these costs are imposed by no-smoking rules, and they are counterbalanced by claims of many writers, artists and other brain workers that smoking helps them think. So any on-the-job effect of smoking is probably outweighed by the hard fact that smokers seem to spend a larger fraction of their lives working – contributing to society – than non-smokers. 

Okay, but why, if smokers incur lower lifetime medical costs, do health insurers require a higher premium from them? Good question, to which there are two answers, one relating to the actual costs borne by insurers, the other to ‘what the market will bear’. First, the actual cost: Lifetime health cost, if we are to believe the [Dutch] study, is lower for smokers than non-smokers. But smokers also get sick sooner and die a bit earlier (on average) than non-smokers. In other words, more of smokers’ health-care cost is likely to be incurred before 65, the age at which they become eligible in the U.S. for Government aid through Medicare. But this is the bit that falls most heavily on a private health insurer. In other words, for the private insurer – but not for society at large or for the Government via Medicare – smokers cost more than non-smokers.  For society and for the Government, smokers cost less.

The market answer is simple.  Smokers have been so successfully stigmatised, and falsehoods about their health-care costs are so widely accepted, that the insurance industry can extract additional premiums from them with little pushback. Smokers, in this area as in so many others, are passive victims.  

In fact, insurers, like other businesses, are probably always guided more by a ‘what the market will bear’ strategy when it will get them more return than simple cost-plus.  Apple, in its fashionable heyday, for example, was able to extract profit margins of 40% or more. As evidence for similar thinking by insurers, consider a case where early demise should save smokers money: lifetime retirement annuities. Early death represents a benefit to issuers of lifetime annuities, so if economics – insurers’ cost – ruled, smokers should be offered lower premiums for lifetime annuities. Have you seen any such offers? Up to 2013 I had not, but since then, something called an Enhanced Annuity is now offered by some insurers: it pays a higher rate to people who can prove they are ill, or – via urine test – a heavy smoker. Not cost, but what the market will bear, sets these rates.

Before I leave the topic of cost, let me leave you with this thought from a recent book on the ‘greying’ of the developed world: “An aging world is an increasingly dependent world. It will demand that a growing proportion of the population devote their lives to the growing share of the people who need care.” Do you think that smokers exacerbate or mitigate this looming problem?

John Staddon is James B. Duke Professor of Psychology, and Professor of Biology and Neurobiology, Emeritus at Duke University.

Tags: Economic costsPublic Healthsmoking

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