Wednesday, 25 September 2013

Public costs are not private costs, part 94

The latest in the long line of attempts to portray smoking as a drain on the economy/NHS/society appeared in Wales today. From the British Heart Foundation press release:

A new report published by ASH Wales - and part-funded by us - reveals that smoking costs the economy in Wales £790.66m a year.

The costs of smoking to the Welsh economy include:

£302 million spent on healthcare costs

£288 million lost to productivity through premature deaths

£49.5 million lost through excess sickness absence

£41 million lost to businesses through smoking breaks,

£25.8 million spent clearing up smoking-related litter

£45.4 million lost through premature death due to second hand smoke exposure

The aim of these reports is to pretend that the cost of smoking exceeds the massive amount of tax smokers pay. Several sneaky techniques are typically used to achieve this, several of which are on display here. For example, lost productivity from premature death would only realistically be a cost to the economy in a society where there is full employment. Few such societies exist, especially in Wales. Besides, economic output is measured per capita. It doesn't decline when people die.

The idea that smoking breaks cost the economy millions of pounds is a load of nonsense that was dreamt up in a notoriously pisspoor Policy Exchange report some years ago. A comprehensive study published recently showed this to be garbage (I wrote about it last month). As for the cost of passive smoking, the figure shown above is risibly high even if you swallow the dodgy assumptions upon which such estimates are based.

Above all, there is no attempt to balance the costs with the benefits. For example, if you're going to count lost productivity as a public cost (which it isn't—it's a private cost), you have to count savings in elderly healthcare, pensions, nursing homes etc which are overwhelmingly public costs. Reports like this never do so, but serious studies by economists find that these savings outweigh the costs—I list a few of them here, and there are many more.

All of this is run-of-the-mill junk economics from single-issue campaigners. It is designed to mislead, but it does not quite amount to an outright lie.

But then comes this...

The report also reveals that the cost of smoking to the economy as a whole is £145m higher than the amount generated by tobacco in tax every year, dispelling the myth that smoking benefits the economy.

What is wrong with these people? The government is not the economy, you muppets. Even if your figures weren't inflated and partial, they would not be a public cost to the state.

Look, ASH Wales, this is how it works. The government gets £600 million in tobacco taxes from Welsh smokers. The government then has to pay for the public costs of smoking. In practice—and ignoring the fact that your figures exclude the savings—this amounts to £302 million in healthcare costs and, at a push, £25.8 million for picking up 'smoking-related litter' (would the roads not otherwise be swept?).

The government therefore turns a tidy profit, which is hardly surprising considering that 80 per cent of the price of a pack of fags goes straight to the state. None of the other costs in this report involve the state having to shell out because—I'll say it again—they are not public costs and it is therefore entirely spurious to compare them with the revenue the state gets from smokers. This is such a basic schoolboy error that it makes you look ridiculous. Using this bungled thinking to claim that you are 'dispelling a myth' shows that you have no idea what you're doing.

This person is the British Heart Foundation's Public Affairs Manager


Junican said...

Why do ASH ET AL not care about the outrageous lies which they are telling? Clearly, it is because of their monopolistic position. But I think that the reason that they are exaggerating so greatly is because they are becoming seriously worried about the loss of public support. Opposition to their schemes is growing rapidly. They are being squeezed from above by Government indifference and squeezed from below by public disdain.
Expect more hysterical attempts to win public support in the near future.

Kin_Free said...

I recently watched a TV program about Hitler's rise to power in Germany and how he used hate propaganda etc. to help him on his way.

One way was the indoctrination of children in the costs to society of those he deemed inferior such as 'cripples',the mentally ill etc.
School teachers had to use examples of how much more these people cost in healthcare, lack of productive work etc. compared with good healthy Germans when teaching arithmetic and maths to children

There was me thinkin that it was ASH or some other 'modern' anti-smoker who came up with the idea of using greed for money to promote hatred of a particular group!

Forget history - doomed to repeat it!