Saturday 26 September 2020

The earnings of smokers - a basic causation problem

Action on Smoking and Health have spent the last ten years claiming that smoking costs the British economy £13 billion a year. When this figure was conjured up with the help of Policy Exchange in 2010, it was - conveniently - slightly higher than the UK's annual tax revenue from tobacco. ASH immediately used their Big Number to demand higher taxes on Pigouvian grounds, but Pigouvian taxes require externalities and a closer look at their methodology showed that most of the £13 billion consisted of internalised costs, principally lost productivity/lost income.
Yesterday, ASH were a pushing a new figure of £14 billion as the annual cost of smoking in lost income alone. 
A new analysis by Landman Economics for health charity Action on Smoking and Health (ASH) finds that the collective impact of joblessness and lower earnings for smokers amounts to £14.1bn a year. Over 300,000 smokers over 21 are economically inactive each year, forfeiting £6.9bn in lost earnings, while the 5.05 million in employment earn £7.2bn less than non-smokers. Working smokers have weekly earnings that are on average 6.8 per cent lower than non-smokers; equivalent to £1,424 per smoker.
You have probably spotted the problem straight away. On average, smokers earn less than nonsmokers because smoking has become a disproportionately working class activity (it was not always thus). But there isn't a causal relationship between smoking cigarettes and earning less money. (Incidentally, even if there were such a relationship, it would be a personal trade-off and none of the government's business). 
People who eat lobster and caviar earn more, on average, than people who don't, but they won't earn less if they decide to stop eating them, nor will you earn more if you start.
The report by Landman Economics - the one-man band of a former left-wing think tank employee - only controls for age, education and gender. That doesn't scratch the surface of the differences between the kind of person who smokes in 2020 and the kind of person who doesn't. 

The report goes on to claim that "almost all of the relationship between smoking and employment is explained by disability", despite acknowledging that smokers are only 2.35% more likely to be disabled and despite there being a huge gap in employment rates between disabled smokers and disabled nonsmokers.

It also makes the striking claim that...

For every person who dies as a result of smoking, at least 30 people live with a serious smoking-related illness.
The only reference for this is a page on ASH's website. Given that ASH claim 50% of smokers die as a result of smoking, it is very difficult to see how it could be true.

The report then calculates that the average employed smoker spends £1,355 a year on tobacco and includes this figure in the 'cost of smoking'. This is literally the cost of smoking, of course, but the author fails to mention that around 80% of it goes in sin taxes that ASH have spent decades lobbying for. 

Neglecting to mention their role in making people poorer, ASH shed crocodile tears in their press release and request yet more money be taken from smokers and given to themselves and their mates.

“Our findings demonstrate how crucial the Government’s ambition to end smoking is to delivery of other key pledges to ‘level up’ economic opportunity and close the health gap between the richest and poorest. Funding for public health must be put on a strong and sustainable footing or the Government will not be able to achieve any of these pledges. The Spending Review must provide the significant additional investment that is desperately needed. The ‘polluter pays’ levy on tobacco manufacturers, which the Government promised to consider over a year ago, should be introduced without further delay.”

It is a typically cynical shakedown from a mendacious pressure group, but expect to hear the bogus figure of £14 billion being bandied around for the next ten years.

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