The Multiplier

An interesting discussion broke out last night in DP’s comments when Sillyusername wrote:

I used to think that the chap who writes the Clearing the Air blog was a little crazy for correlating economic downturns with smoking restrictions and bans, but I am beginning to change my mind. In an already slow economy I think the impact on pubs, bars, restaurants, tourism and places of entertainment is probably enough to tip the balance such that an already difficult situation becomes seriously bad.

Others agreed, and Jax added a carefully-considered comment, the gist of which was that the US sub-prime market which lent money to low-paid workers, and which collapsed in 2008, had been around for 20 years, and it collapsed because the low-paid workers with sub-prime mortgages were losing their jobs, and many of them would have worked in the hospitality industry that was taking a hit from smoking bans that were multiplying across America after 2000. She also points out that smoking bans are like on-off switches; they aren’t introduced gradually. They come in hard.

I was wondering about this (again), and wondering whether there was any data around anywhere on the economic impact of smoking bans, when I remembered my own personal ISIS  social impact survey that I’m currently conducting. Two questions in it – Do you go to pubs, etc, more or less? And do you stay home more or less? – were questions from which economic consequences might reasonably be inferred. If smokers go to pubs and restaurants less, they’ll be spending less. And if they stay home more, they’ll be spending less too (unless they buy a lot of stuff online, or throw money out of their windows).

So I leafed through the responses I’d got to these two questions, and found that while about half of my respondents (all smokers found outside English pubs) reported no change, and 10% reported spending more time in pubs, and less time at home, over 40% reported spending less time in pubs and more time at home, and half of these said they were spending a lot less time in pubs, and a lot more at home.

My survey, furthermore, underestimates the numbers of smokers who go a lot less to pubs, because by only surveying smokers I find outside pubs, I don’t encounter the smokers who never go to pubs now (which includes a fair number of the commenters on this blog). I’ve no idea what the numbers of such people are, but 10% of smokers seems a plausible number, and so while 10% of smokers go to pubs more, probably about 50% go less (and the same with staying home).

So that means that, on balance, 40% of English smokers are most likely spending less. However, people like ASH’s Deborah Arnott say that if they’re not spending money in pubs, then they’ll be spending it elsewhere. That’s possible, but in my case I can’t really think of anything on which I’ve spent money instead. Over the past few years I’ve become something of a skinflint, hating to spend money at all, and even buying bargains in shops (something I never used to do). And other people are reporting the same. So I’m going to assume that some smokers have indeed been spending less.

Nevertheless, smokers won’t have entirely stopped spending. They still need food, electricity, gas, water, etc. So what happens if their spending has fallen by just 25%? Well, with British smokers making up about 25% of the population, when 40% of them spend 25% less than they used to, then 2.5% of consumer demand drops out of the economy.

This didn’t seem like much, until I remembered the multiplierand dug out one of my elementary economics textbooks:

The reason why wars cured slumps was that they injected purchasing power into the economy: the demand for guns, ships, and uniforms raised aggregate monetary demand. It didn’t have to be wartime demand: any demand would do. The more massive the unemployment, the more massive the injections of extra monetary demand that would be necessary to cure it; but however much extra spending power was injected there would be a multiplying effect, because the money injected would be spent several times over.

To begin, let us consider Mr Average, who earns a low wage and has a high propensity to consume, while Mr Well-To-Do earns a very high wage and has a low propensity to consume. Suppose Mr Average receives a pay rise of 1.00 per week. He will promptly spend it, and aggregate monetary demand (AMD) rises by 1.00. Suppose the person he gives it too is also rather poor, and promptly spends it. AMD has now risen to 2.00. If the third person also spends it, AMD will have risen to 3.00. If this went on fast enough and often enough, the single 1.00 would multiply around the economy an infinite number of times….

The marginal propensity to save is the inclination of the individual to save any extra income that he happens to receive. The multiplier is the fraction

1 / marginal propensity to save

Thus if the nation on average saves half of an increment in its income, the multiplier is 2. If the nation saves one-third the multiplier is 3, and if it saves 1/20th the multiplier is 20. The multiplier is the amount by which any injection of spending power into the economy will be multiplied round the economy by people passing the extra income on to others, who pass it on to third persons, etc.

Now, if I understand that right, then when people spend less money, there must also be a multiplying effect. A spends less, so B spends less, and consequently C spends less, and D, and so on.

So when 2.5% of demand gets pulled out of the economy, that must get multiplied up.

By how much does it get multiplied? Well, we might notice that it’s the less-well-off in the example above who tend to spend rather than save, and since smoking bans tend to hit the less-well-off (the middle classes having largely quit smoking) the multiplier is likely to be large rather than small. Furthermore, I’ve been hearing in recent years how lots of people are borrowed to the hilt. And borrowing, in my book, is the opposite of saving. So that increases the multiplier too.

So if the multiplier was 10, the 2.5% drop in consumer demand by banned smokers would multiply to a 25% drop in aggregate monetary demand (AMD) across the whole economy. And that really would be a deep slump.

So if you take Jax’s arguments, and my survey estimates for the fall in smokers’ demand, and factor in a large multiplier, you maybe could indeed produce a deep slump.

At the end of her essay, Jax wrote:

And quite apart from all of the above, there is no other single large change in terms of legislation, regulations, employment, social habits or social circumstances which coincides with the timings, the type and the nature of the collapse of the sub-prime mortgage market so perfectly. So, when asked, no “expert” economist, anywhere, can actually come up with another reason as to why the collapse happened when it did after two decades without any significant problems, and – more importantly – as to why it was so sudden as to take everyone by surprise. Because there isn’t one.

I beg to disagree. Because I’ve never heard any economist ever mention smoking bans as a likely cause of the economic down-turn. The only person who did mention it (just once) was Gordon Brown’s short-lived Chancellor Alistair Darling. And if it’s the only explanation, why isn’t every single economist pointing to it? As far as I can see, none of them are!

And there are some good reasons why they can’t see it. And the first of these is that smoking bans aren’t in the economic textbooks. They’re very unusual, and so the effects of them are unlikely to be well understood. And the second reason is that there is a powerful lobby of antismokers – ASH and co – who are insisting that smoking bans have zero negative economic impacts, and actually increase productivity. And their word is law throughout government and the media. So I doubt that economists are considering smoking bans as possible culprits for the slow-down. Everybody knows they’re absolutely wonderful!

Anyway, my principal point is that if you factor in the effects of the multiplier to any fall in demand from excluded and demonised smokers, a small drop can become magnified into a much larger one. And particularly in a time when the marginal propensity to save is small. So I’m now much more inclined to think that smoking bans can cause recessions. Although I’m still very far from convinced that they have.

And I wonder whether all the current Quantitative Easing can help very much. I don’t really understand how it works, but I think that central banks’ purchases of bonds pump more money into the system, and increase liquidity, and help to kickstart the stalling economy. But it won’t help at all if the lost demand from smokers (who have now effectively become savers) isn’t somehow re-introduced into the economy: you’re just cranking the handle of an engine which is starved of fuel. It’s not going to work.

Advertisements

About Frank Davis

smoker
This entry was posted in Uncategorized and tagged , . Bookmark the permalink.

69 Responses to The Multiplier

  1. harleyrider1978 says:

    Official: Smokers Actually Visit Bars Less Often Now
    Health Dept. Corrects Report On Smoking Ban

    COLUMBUS, Ohio — The Ohio Department of Health has corrected a report on the impact of the statewide smoking ban following questions by a state senator.

    Director Theodore Wymsylo says smokers and non-smokers were flipped in a chart showing how frequently they’ve visited bars since the ban took effect in 2007.

    The graph now shows that 40 percent of current smokers who were surveyed say they visit bars less often, while about 7 percent of non-smokers say they go more often.

    Republican Sen. Bill Seitz, of Cincinnati, and the ban’s opponents have seized on the report, saying it’s flawed and its executive summary omitted certain figures.

    The Ohio Supreme Court is scheduled to hear oral arguments Oct. 19 in a constitutional challenge to the ban brought by bar and restaurant owners.

    Read more: http://www.wlwt.com/health/29420203/detail.html#ixzz1aI1LJt56

  2. beobrigitte says:

    …people like ASH’s Deborah Arnott say that if they’re not spending money in pubs, then they’ll be spending it elsewhere.
    She is not completely wrong; A lot of smokers do buy tobacco/cigarettes on the black market and some adventurous people help to revive the “home brewing” industry as well….
    (Glad to have been given a recipe for Sloe gin years ago!)

  3. I think you’re being over technical and the multiplier effect doesn’t really exist.

    The point is that ANY restriction on economic activity has the net effect of depressing the economy*, and is completely unjustified unless the harm that activity causes (like selling stolen goods) outweighs the benefits (getting cheap gear at a boot sale).

    * it must do. If they ban smoking, the health Nazis can claim no effect, ditto for fatty food (“People will spend more on healthy food”) but what if they also ban going to the cinema (“too much sitting around eating”) well, the Nazis argue, people will go for a walk or go to the theatre (or something righteous) and so on and so forth until they’ve banned everything apart from growing organic tomatoes and delivering them by bicycle. Where’s our economy going to be then?

  4. FFS, the thingy says “no need to log in” and I left a lovingly crafted comment agreeing with you (but for different reasons) and then The System told me to log in after all so I did and then my comment disappeared into the ether.

    Anyways, sod it, of course you are right. Any restriction on economic activity reduces the size of the economy, it must do. What if they banned every activity apart from growing organic tomatoes and delivering them by bicycle. Where’s the economy then?

    • Frank Davis says:

      I rescued it from the spam folder.

      The multiplier doesn’t exist?? I must have read about it hundreds of times! I’m sure Keynes used the concept (and lots of other economists as well). What happened to it?

      What if they banned every activity apart from growing organic tomatoes and delivering them by bicycle. Where’s the economy then?

      Well, there wouldn’t be one. But we’d all be very, very, very, very, very healthy. And most of us would live for hundreds of years.

      • churchmouse says:

        @Mark — The multiplier does exist.

        I lived in a town where a major manufacturer closed. The businesses around this plant were severely affected: cafes, small shops, etc. Those who were put out of work had patronised these businesses.

        A lot of other people’s livelihoods are affected by hundreds of jobs going bust. Even 20 – 25% loss of income will affect individual businesses.

        Why would it be any different with the smoking ban? Even trade journals for the marketing industry (left-wing, anti-smoking) admitted that, according to their surveys, 65% of pub patrons were smokers. (No source — paper copy from June 2007.)

  5. jaxthefirst says:

    “So, when asked, no “expert” economist, anywhere, can actually come up with another reason as to why …”

    Yes, sorry about that. That was badly written (well, it was getting rather late when I wrote it – that’s my excuse and I’m sticking to it!) What I should have written was “a reason” rather than “another reason.” Because, of course, you’re quite right. Any commentator/interviewer who was seeking the views of economists at the time of the collapse of the sub-prime market simply never mentioned the escalating number of widespread smoking bans as a possible reason. (I wasn’t even aware that Darling had alluded to it at all).

    Smoking bans, it seems, have become as much the proverbial elephant in the room for the MSM when it comes to their devastating economic effects as they have in any discussions about pub closures! No wonder, then, that all those bank bailouts and Quantitative Easing and austerity measures simply aren’t having the desired effects, any more than any mealy-mouthed small-time efforts by politicians to “save the British pub” have made the slightest difference to the steady disappearance of the British local. After all, you don’t cure a deeply infected wound just by putting some Savlon and an Elastoplast on top of it and saying “there, there diddums”…

  6. Woodsy42 says:

    It’s possible the non-pub attenders are spending more on home entertainment – Sky TV being the likely winner. But that doesn’t alter the argument because money spent on Sky doesn’t pass into and circulate through the social bits of the economy and help small business, it goes directly to media corporates or SKY just sit on it.

  7. Re Econ impact of Bans: I think my partner Dave has done one of the best gatherings of information on this on the web that’s available:

    http://kuneman.smokersclub.com/economic.html

    Additionally, Bill Hannegan in the US has put together an impressive set of post-ban economic stuudies done by actual Ph.D. economists that strongly contradict the nonsensical economic “research” done by antismoking advocates and published in MEDICAL journals!

    Picture the possibility of being in another discipline, doing research that no one else in that discipline would publish, and then cross-hopping someplace else to magazines where the research was dominated by advocates and publishing your work there!

    THAT is exactly what antismoking researchers have done, and THAT shows exactly what their research is worth!

    Michael J. McFadden
    Author of “Dissecting Antismokers’ Brains”

    • harleyrider1978 says:

      Michael I got one a nazi tossed at me this week I will even link it here for ya:

      No decline in total restaurant or bar revenues occurred in El Paso, Texas, after the city’s smoking ban was implemented on January 2, 2002. These findings are consistent with the results of studies in other municipalities that determined smoke-free indoor air ordinances had no effect on restaurant revenues (2,5–8). Despite claims that these laws especially might reduce alcoholic beverage revenues (2), the mixed-beverage revenue analyses indicate that sales of alcoholic beverages were not affected by the El Paso smoking ban.
      http://www.cdc.gov/mmwr/preview/mmwrhtml/mm5307a2.htm
      The study looked at taxable sales in cities larger than 25,000 people in

      Missouri and Kansas from 2000 through March 2010 and discovered that
      the pre-ban and post-ban numbers were unchanged in Kansas City.
      It appears that smokers didn’t decide to just…stay home eating, drinking and
      chain-smoking in their living rooms. “As expected, we find that taxable sales
      in restaurants and bars are
      strongly, positively related to overall economic conditions, with sales
      rising as overall economic activity increases and vice versa,” Dr. Chaloupka told the Health Care Foundation. The Health Care Foundation paid for a second study looking into air
      quality in the saloons in KCK, which fell under the smoking ban that the Legislature approved last July. Not surprisingly, it found
      that the air in bars and restaurants now is, like, waaayyy better now
      than it was when you could smoke. The air quality went from “unhealthy”
      to “good.”

      http://www.southbendtribune.com/news/opinion/sbt-20120801sbtmicha-05-05-20120801,0,6998148.story?fb_comment_id=fbc_10151057730227235_23369452_10151057926757235#f50fb9dfeaa6c

      • churchmouse says:

        Yes, but TC combine restaurant and bar takings. They do not separate them, which would show that bars are suffering losses.

        • junican says:

          From the study quoted by Harley:

          To assess whether the El Paso smoking ban affected restaurant and bar revenues, the Texas Department of Health (TDH) and CDC analyzed sales tax and mixed-beverage tax data during the 12 years preceding and 1 year after the smoking ban was implemented.

          In the summer of 2007, when the ban came into effect in England, we all went to the pub as usual and lots of us sat outside laughing and having a jolly time. In 2008, there were far fewer of us. In 2009, that scenario vanished.

          Which shows that the effect of bans is a gradual process. The first year after a ban is unlikely to show any change. It takes time for people to adjust their habits and discipline themselves.

        • Frank Davis says:

          It probably varies from place to place. In my bit of Devon, where I was living in 2007, the ban killed off my small circle of acquaintances more or less immediately. But I’ve seen other pubs (even ones without gardens) with customers who hang on grimly even now, even though they hate the ban.

          All the same, on aggregate it comes down to a slow process.

      • Tom says:

        If you lose 20% of your clientele, but raise your prices to make up for it, then you would show no change in total revenues. If you begin slowly edging the anti-smoking crowds to accepting the fact they will have to pay for the loss of 20% of your clientele by way of higher pricing, then they will come to expect it – then sky’s the limit on pricing in time. So total revenues is not a true measure if does not take into account total tabs and price per item. That is just my idiotic non-serious illogical opinion at least.

  8. smokingscot says:

    Not sure how you factor this in. Edinburgh is rubbish for international flights, so most of us have to route via a major hub. I do a minimum of two medium hauls every year, via Amsterdam, using KLM. I could use Heathrow and BA, but prefer to pay the premium to avoid the multiple terminal issue of Heathrow and, now quite crucial, so I can have a smoke in peace, usually in the Irish pub in sector D.

    This one’s a lot easier to facor into your multiplier theory. As taxes rise and VFM drops, those with 250 grand or more to their name get the hell out!

    http://stage.money.aol.co.uk/2012/08/06/rich-britons-prepare-to-flee-the-country/

  9. timbone says:

    I think it was 2009 when I tentatively suggested a link between recession and smoking ban. I received a patronising comment suggesting I was being a little infantile. (Not on this blog, and not from you may I add). When I look at the ‘eurocrisis’ and think of Greece, Italy, and now Spain, is this a coincidence?
    I know that there are some conspators in the world of tobacco, aka Tobacco Control. I do however genuinly believe that the majority of the people who are controlling the world’s finances, inc MPs and bankers, are never smokers whose non tobacco enhances brains cannot concieve a link.

  10. jaxthefirst says:

    I’ve always thought that Arnott’s argument that smokers would spend their money on other things was a strange one. How on earth can we go out and “spend our money on other things” when all of those “other things” have been as much ruined by the smoking ban as has our enjoyment of pubs, clubs and restaurants? I don’t want to go anywhere by train any more (something which I used to enjoy a lot) because all of the trains and their station platforms are rabidly anti-smoking; I don’t want to go to the theatre any more because all the theatres are rabidly anti-smoking; I haven’t been to the cinema in years because they’ve been rabidly anti-smoking even since before 2007; I don’t want to go browsy-shopping any more because all those little places I would formerly frequent for coffee or a drink or some lunch are all rabidly anti-smoking; I don’t go to watch sporting events any more because all the stadiums are rabidly anti-smoking; I don’t go to work “do’s” at Christmas or for leaving parties etc any more because all the venues chosen are rabidly anti-smoking; I don’t go away for weekends or short breaks any more because all the hotels are rabidly anti-smoking; and I haven’t flown abroad anywhere for years because the airlines have been rabidly anti-smoking for decades and, now, most of the major airports (with a few notable exceptions) are following suit.

    And even if those places aren’t rabidly anti-smoking, they always give the impression that they are, simply by omitting to make a point of mentioning if they’ve got at least half-ways decent facilities for smokers – or, often, if they’ve got any provision for smokers at all – which to me feeds into the impression that smokers and their money aren’t basically welcome or that at best they are “tolerated,” for the sake of getting our custom, which I think is nothing short of a bloody cheek! I refuse on principle to paying the same amount of money as everyone else, just to be “tolerated” for the sake of some company’s bottom line.

    So where, exactly, does Arnott think we are going to go to “spend” all this money that we aren’t spending doing all the things we used to do? She has clearly failed to recognise that her beloved ban not only ruined pubs and clubs for us, but it pretty much ruined everything else, too, including lots of activities (theatre, cinema, shopping, sports events) in which smoking played only a minor, but nonetheless essential, part in the enjoyment of the whole experience.

    • Frank Davis says:

      which to me feeds into the impression that smokers and their money aren’t basically welcome or that at best they are “tolerated,” for the sake of getting our custom

      What happens when we say goodbye?

      I’ve already said goodbye. Total goodbye to them all.

      It’s a very, very big goodbye that I have bade them.

      It’s a total goodbye.

      I really don’t want to know them any more.

      How do I explain that to them?

      That I don’t want to know them any more?

      Never want to meet them again?

      • Margo says:

        Me too. Jaxthefirst is right, it’s not just the pubs etc. I don’t go ANYWHERE now and won’t travel any distance on anything where I couldn’t smoke if I wanted to. The ban’s had an enormous effect. The last time I went to my old pub they’d converted themselves into an eaterie – terrible smell of chicken-and-chips on my clothes and in my hair next day.

    • smokingscot says:

      She also said that 70% of us wanted to quit and welcomed the ban as a means to help us do so.

      And you may recall that business about non smokers turning out in their droves because of smoke free premises. She speculated that business would go up in some cases.

      Of course she’s now saying that kids are attracted to glitzy fag packs and really truely want to get their paws on them from the minute they can legally do so. Of course she was the prime instigator in raising the minimum age from 16 to 18.

      It goes on… and on.

      She’s incredibly good at feeding garbage into the trough of those creatures we see in funny wigs, long stockings and such and hang out in an imposing building with a noisy bell. They lap it up, they really do!

  11. raymond barfoot says:

    dear frank, you are essentially correct,but for an entirely different reason.people are not numbers and react to a logic all our own.no two prople see things the exact same way or react the same way.just sayin is all i will shut up npw need a smoke and a cuppa coffee, raymond barfoot

  12. waltc says:

    The multiplier effect is merely logical. If I don’t go to the diner, the waitress doesn’t get my tip, and if her tips go down, she washes her own uniforms instead of taking them to the laundry, and if the guy at the laundry… and so on. What They also don’t factor in is that if I were buying my cigarettes at their strictly kosher and exorbitantly taxed rates ($12-14/pack) it means I’m not spending that money on buying a new whatever.. book, sweater, more expensive bottle of wine.

    I did, however, cock my head at Jax’s suggestion that the smoking ban had something, or anything, to do with the unemployment rate and the (subsequent) bursting of the sub-prime bubble and the consequent crash. So I did a quick google to double-check my recollection. At least here in the US the bubble burst in the early fall of 2008 when the unemployment rate in October was 6.6, about where it had been for a while. By December it was 7.2 and it wasn’t till the following November (2009) that it climbed to 10.2. Or IOW, as I’d recalled, it was the POP of the bubble that led to the unemployment that led to further foreclosures that led to further unemployment (talk about multipliers) and the bubble popped for all those often-recited reasons.

    However, I decided to check the numbers for NYC where the ban came in (IIRC) in March 2003– and pulled up this end of year (2003) factoid from the NY Times:

    “…the unemployment rate for black men in New York City rose by 5.3 percentage points, to 12.9 percent, in 2003. The employed-population ratio dropped by 12.2 percentage points, to 51.8, from a cycle peak of 64 in 2000. The employed-population ratio for Hispanic men dropped by 7.1 percentage points; the ratio for white men dropped by 2.1.”

    The article makes it clear that it’s discussing basically unskilled and semi-unskilled laborers and labor– exactly the kind of jobs that would go to, say, restaurant kitchen help. So I could at least postulate that the ban cost jobs for the less skilled, which in turn had multipliers.

  13. Two points:

    1) In terms of multiplier effects and possible impact on the larger overall economy, again I’d refer readers to the study Dave Kuneman and I (heh, mainly Dave: I just prettied it up a bit at the tail end!) did at http://tinyurl.com/BanLosses A reasonable estimate of a one hundred billion dollar loss to the economy in just a single US State due to its bans can NOT be ignored.

    2) In terms of that “They’ll just spend their money elsewhere.” argument: it *sounds* good at first, but it’s got a weakness: there will be a certain, unknown proportion of smokers and their families who will simply skip working those extra hours or taking that second job or will decide to retire early because they are not spending as much at the smoking banned restaurants etc. So they are neither making nor spending as much and thus have a negative impact on the economy.

    – MJM

    • The fire is supposedly “contained but not extinguished” at this point (five hours after its start?) and yes, we’ll probably see some multiplier effects on the West Coast when the gas prices pop up. You have to admire this quote for its talented understatement:

      “We are ‘very disappointed that this happened, and apologize that we are inconveniencing our neighbors,’ Chevron spokesman Walt Gill told local television.”

      – MJM

      • Margo says:

        Lots of nasty fumes in the air. But it’s fine, ‘perfectly safe’ (we can just blame any increase in respiratory troubles on the smokers, can’t we).

  14. smokervoter says:

    As economics was one of the few bright spots of my otherwise wanting educational merits, I’d like to add my two dollars to the arguments here.

    I see the production possibilities frontier underperforming as a result of 20-30% of the population spending less and experiencing a curtailed disposable income from the imposition of sin taxes.

    The way I see the flow of funds is that I forgo x-amount of dollars, money that could have been saved or used to pay for the increased health insurance premiums that are charged to smokers for example. These dollars instead wind up diverted into the coffers of the tobacco control industry.

    Because Tobacco control employees represent a relatively small slice of the population and the inflows are quite high, much of it gets saved as they can’t absorb the massive inflows. Their contribution to a robust economy is questionable.

    They will claim that they save society lots of money in the form of reduced health care costs, but it’s hard to see how that is possible. Take my state for example. Tobacco control has allegedly managed to reduce smoking prevalence by 1.4%/year over the past 50 years. With 4 million smokers in California, that means they cut a net 56,000 from the smoking rolls and ergo theoretically from using uncompensated health care services in a given year. Of course far fewer than that number actually require this. Let’s not forget about those health insurance premiums.

    Even if a very generous one-third did (18,667), that would seem to be more than offset by the $905 million annually collected from us in taxes by the state.

    This ignores the retail multiplier effect and already we’re seeing a significant adverse effect on the production possibility frontier. Opportunity cost is an often overlooked economic concept.

    • Smokervoter, the “lowered health expenditures” has been pretty thoroughly exposed as a lie by this point. Even ten years ago when I wrote the first drafts of “Taxes, Social Costs, and the MSA” (See: http://pasan.thetruthisalie.com ) the New England Journal of Medicine admitted that if everyone quit smoking it would ADD about 10% to health care costs (that’s 200 billion dollars a year increase in just the US.) and there have been several studies done more recently offering similar results for both smoking and obesity.

      – MJM

  15. Mr A says:

    “I’ve never heard any economist ever mention smoking bans as a likely cause of the economic down-turn. The only person who did mention it (just once) was Gordon Brown’s short-lived Chancellor Alistair Darling. And if it’s the only explanation, why isn’t every single economist pointing to it? As far as I can see, none of them are!”

    Because smoking bans seem to be that rare beast where no-one seems to even notice them unless they themselves are a smoker and they see how they affect their own behaviour and those of their friends.

    Why is the socially-limiting impact of smoking bans on the elderly never mentioned?

    Why is the rise in gay-bashing never mentioned (an odd one this, as the gay community has a well developed “advocacy” system). Can it be that the (non-smoking) members of Stonewall and the like have never even considered that making people stand outside well-known gay venues at 2am in the middle of city centres may not be the wisest thing, as they have never done so themselves?

    Why do some even have the temerity to argue that smoking bans haven’t closed pubs? It’s because THEIR pub-going hasn’t altered at all, the ban hasn’t affected them at all, and they just cannot conceive of such “a minor thing” having any impact.

    Yet it seems clear that if you limit the spending of 25% of the population (and let’s face it. most of their friends) you will cause catastrophic damage. I may be an exception, but I used to spend well over a grand a month on going out. Now I spend less than £50 most months. That’s a lot less money going to night-time venues, taxi companies, take-aways etc. And in turn, a lot less money they can spend in other areas, too. Indeed, I have spoken to several taxi drivers about how their business has declined after noticing that what used to be the post-pub cacophony of calls on their radios had become pretty much one call per journey. Also, while there are only 2 smokers in my group, I have noticed that my non-smoking friends (about a dozen of them) no longer go out as much, too. Yes, they go to Center Parcs etc for the weekend, but nights down the pub have been replaced by smoky-drinkies (even though they don’t smoke) as they now find pubs to be “dead”, “dull” and “unatmospheric.” Despite them saying this, most of them (again!) do not seem to recognise that this change of opinion happened after the Ban, thinking instead that “it’s just something that happened”…..

    I don’t know what it is, but people can have the evidence in front of their face, but if the last time they thought about the smoking ban was when they say the news reports about it in July 2007, then they do not add 2 and 2 together to make 4.

    • Mr A says:

      Indeed, if you asked many of my friends what they thought of the ban, some would oppose it on libertarian, property-rights grounds, some would oppose it as they liked smoky pubs, but yes, some would say that, whilst not being anti-smokers, that they personally generally like smokefree pubs. Yet these are the same people who used to go to the pub 4 times a week without once saying anything about smoke, who, within 6 months of the ban coming in, let their pubgoing drop to once a month or once very two months, as they now find pubs to be dead and “like a waiting room that sells beer.”

      You can present evidence all you like, some people just can’t see it as, unlike me, who rails against the Ban every single day, some people have not thought about it since July 2007. And that is why the economic damage of bans is ignored and, yes, the political damage of bans, too. We know there is a correlation between smoking bans and the fall of some of the Arab nations.

      I’s like to see if there is a “correlation” between the rise of libertarianism/rejection of the liblabcon since 2007.

      I’d also like to see if the rising “distrust of experts” has increased markedly since 2007.

      I think the impact of such bans is grossly underestimated. I know I became radicalised by the ban. And I know that many of the libertarian blogs that sprung up were inspired either wholly, or in part, by the Ban, too.

  16. Frank Davis says:

    I’d also like to see if the rising “distrust of experts” has increased markedly since 2007.

    It seems that it has.

    It’s one of the most remarkable findings (so far) of my own personal survey of smokers (which I’m still doing), that almost 80% of them now distrust ‘experts’. I’d not expected that.

  17. Frank Davis says:

    Because smoking bans seem to be that rare beast where no-one seems to even notice them unless they themselves are a smoker and they see how they affect their own behaviour and those of their friends.

    Why is the socially-limiting impact of smoking bans on the elderly never mentioned?

    Yes. They don’t notice them. They either don’t mind smoking bans themselves, or they quite like them. But they have no consideration for smokers. It never occurs to them that smokers who have been, in Deborah Arnott’s words, “exiled to the outdoors” might suffer a little as a consequence. They don’t see what happens to other people. They aren’t in the least bit interested.

    Why do some even have the temerity to argue that smoking bans haven’t closed pubs? It’s because THEIR pub-going hasn’t altered at all, the ban hasn’t affected them at all, and they just cannot conceive of such “a minor thing” having any impact.

    A few years back I was complaining to a (now ex-) friend of mine about the ban, and he said: “Well, I like it!” As if that was all that mattered. And indeed, for him that was all that mattered. He couldn’t put himself in someone else’s shoes.

    I can understand this, of course. I am myself no doubt in many ways as inconsiderate as anybody else (and antismokers always regard smokers and smoking as inconsiderate of other people, even of other smokers).

    What I don’t understand is how, even when the impact of smoking bans is explained to them, they still don’t get it. They just don’t get it that people who are made to stand outside don’t like it very much. It seems to go in one ear, and out the other. As if it was some incomprehensible algebraic formula. It does not compute. It makes no sense to them.

    Some of them understand. Some of them can see what’s being done to smokers, and how vile it is. But most of them don’t. It’s not happening to them, and so they don’t notice.

    You can present evidence all you like, some people just can’t see it as, unlike me, who rails against the Ban every single day, some people have not thought about it since July 2007.

    They are completely blind, it seems.

    • jaxthefirst says:

      There is, I think, a sort of a malaise within society at the moment that even if people haven’t experienced something then they nevertheless think they know all about it just from their own very limited outside perspective. I see and hear it a lot about a lot of things – although matters concerning smoking are the most obvious ones because that’s the biggest blind spot of all.

      You’ve only got to look at the comments sections on the internet to see it at work. There are comments galore from parents with perfect children telling parents with difficult ones how parenting “should” be done, comments from people who have never been involved in crime making wildly generalised statements about why criminals commit offences, comments from non-smokers saying how standing outside in the rain for a cigarette is not a big problem when they’ve never had to do it themselves, comments from teetotallers giving chapter and verse on how to cure the “binge drinking problem,” comments from people working in the private sector generously giving advice to civil servants as to how they should be doing their jobs, comments from parents telling teachers how to run their classes and keep discipline in schools.

      Maybe it’s a knock-on effect of your newly-revealed decline in respect for “experts,” Frank. Because if, in the public’s mind, “experts” have now been reduced to the same ordinary, ignorant level as everyone else, ergo “everyone else” now thinks of themselves as being of “expert” level and therefore believes that they have the right to speak with authority on matters about which they actually know precisely nothing – as their often laughably unworkable and ignorantly unrealistic suggestions illustrate.

  18. Frank Davis says:

    What is the Keynesian multiplier?

    The Keynesian multiplier was introduced by Richard Kahn in the 1930s. It showed that any government spending brought about cycles of spending that increased employment and prosperity regardless of the form of the spending. For example, a $100 million government project, whether to build a dam or dig and refill a giant hole, might pay $50 million in pure labor costs. The workers then take that $50 million and, minus the average saving rate, spend it at various businesses. These businesses now have more money to hire more people to make more products, leading to another round of spending. This idea was at the core of the New Deal and the growth of the welfare state.

    Taken further, if people didn’t save anything, the economy would be an unstoppable engine running at full employment. Keynesians wanted to counteract saving by taxing savings to force people to spend more. The Keynesian model arbitrarily separated private savings and investment into two separate functions, showing the savings as a drain on the economy and thus making private investment look inferior to deficit spending. Unless someone holds his or her savings entirely in cash – and true hoarding like this is rare – it’s invested either by the individual or by the bank holding the capital. Friedman, among others, showed that the Keynesian multiplier was both incorrectly formulated and fundamentally flawed. (For more, read Free Market Maven: Milton Friedman.)

    I wonder what Friedman’s argument was? He was a monetarist (I think) who thought in terms of the quantity of money in an economy. More money = higher prices.

    Perhaps he had a completely different conception of economic processes than Keynes. A different paradigm. As if one was using a Ptolemaic earth-centred solar system, and the other was using a Copernican sun-centred one, maybe.

    [See also.]

  19. Steve Kelly says:

    Smoker bans probably contribute quite a bit to society’s economic troubles; however much they do contribute that’s fair enough for a vicious unjust society; it deserves the worst it gets and then some.

    I didn’t really set out to boycott anti-smoker venues but I’ve done so. Bars & restaurants (and most places generally) are places I’m not wanted or have no place in, something like churches of denominations I don’t belong to, so I just stopped going to them, reflexively.

    The last time I bought a drink in a bar was in about 2004. That was on a trip to Quebec. I’m banned there too, now, so will never go there again. I’ve never missed going to places I don’t belong in.

    I suppose the “hospitality” proprietors miss my money but they don’t miss me and I don’t miss them. They’ve said to hell with me & I’ve simply reciprocated. They couldn’t care less about it all, & I feel the same, on a personal level.

    I hate the smoker pogrom on principle but even if it died before I did I wouldn’t return to bars & restaurants, or to reading mainstream newspapers, or to having any faith in societal institutions.

    The smoker pogrom brought to my close attention that society isn’t worthy of any faith. It never will be. If it lets up on smokers it will then start looking for other targets: the elderly, maybe, or short people, or whatever. It will again prove “scientifically” that primitive, angry social division, fear, and hate, pave the lone road to “progress”.

    Some people are decent. By far most aren’t. They have an infinite capacity to see Hell as Utopia. So even a half-decent society is a rare, lucky, and always brief situation. You live & learn that.

  20. Margo says:

    It’s just struck me – this blog is like my new pub, kind of. All sorts of intelligent and interesting people come in, from all over.

    • Barry Homan says:

      It’s true. I’m here almost every evening, reading comments, unwinding with my glass of wine, my pack of Prince Silvers close by. I check the links, I spend an hour sometimes just reading.

      Gee…shouldn’t some struggling pub-owner have me down at his place, parking my butt in a smokey corner, and chewing the fat with friends and strangers? Why, he’d get rich.

  21. Furtive Ferret says:

    One thing that the analysis appears to miss, forgive me if it has already been mentioned but I haven’t the time to read through all the comments, is this:

    I expect that there may be a similar number of non-smokers (not anti-smokers) who also stopped going to the pub because their smoking friends no longer go. This is the situation that I find myself in. As a non-smoker I too haven’t really set foot in a pub on a social group basis for a “night out” since the ban started either.

    • Frank Davis says:

      There do seem to be a surprising number of non-smokers who get caught up in the ban, along with their smoking friends. In my survey of smokers, I’ve got one non-smoker, and he was very vocal in his opposition to smoking bans.

    • beobrigitte says:

      The one thing the anti-smoker underestimated is that they cannot destroy friendships between smokers and non-smokers however much they try to aggravate non-smokers against smokers and vice versa.

      I fully agree, my non-smoker friends have often said that they find their social life affected by the smoking ban, too.

      Non-smokers probably know best that smokers have no objection to non-smoking pubs/effectively separated areas; smokers object strongly to being – as a paying customer – kicked out the door when they wish to have a cigarette.

      • Furtive Ferret says:

        It always struck me as ironic that the fresh air freaks wanted to kick the smokers out in to the fresh air rather than sit in it themselves and then whine when they had to pass through the smokers to get inside and then whine that they had nowhere to sit outside because that’s where the smokers were.

        I guess what it comes down to is the Apartheid on smoking was never about health.

  22. garyk says:

    Many of the TC figures show that there is no drop in sales or tax receipts; but, the effects of inflation and population growth must be taken into account.

    A 1% drop in the number of consumers can be off-set by a 1% inflation in the worth of money.People have to spend more to buy less goods.

    A decrease in bar takings can be off-set by an increase in the cost of take-out for restaurants that offer that option.

    In America, most fastfood places are smokefree and they are they fastest growing part of the food industry. A smoking ban does not have an effect on them.

    Mom and Pop joints can be going out of business left and right while sales and taxes for an area stay the same.

    • Frank Davis says:

      In America, most fastfood places are smokefree and they are they fastest growing part of the food industry. A smoking ban does not have an effect on them.

      Mom and Pop joints can be going out of business left and right while sales and taxes for an area stay the same.

      That’s a good point. I hardly ever go to restaurants on my own these days, but I’ll buy Chinese or Indian takeaways, or fish and chips. Equally, while I used to go to cafes and tea-rooms, I now prefer vending machines, if there are any around.

  23. Joe Jackson says:

    Hello Frank, I’m on your side, but I’m concerned by your often-repeated claim that ‘25% of people in the UK are smokers’ – thus smokers constitute an army of 15 million. This needs to be sorted out (can anyone help?) Firstly the population is somewhat less than 60 million, but letting that go for the moment, as far as I know, smoking rates are calculated from surveys, and projected across the ADULT population – i.e. those who can legally smoke. And the current official statistic is 21%. Now, I wouldn’t be surprised if the surveys are unreliable and the smoking rate is a bit higher, but nevertheless, I believe these are the only statistics we have to go on, and 21% of the adult population is probably quite a lot less than 25% of the total population. Anyway this raises a couple of issues of principle: (a) it shouldn’t matter what the actual percentage is – it’s not the point. Much smaller minorities are fiercely defended, by the same authorities who stigmatise smokers (e.g. gays are about 5%, Muslims are less than that). And (b) one of our biggest problems with the Antismoking brigade is their dishonesty with statistics . . . therefore I think that it’s important not to imitate them. If we consistently get our facts right, we will gradually acquire more respect, while they lose theirs!

    • Mr A says:

      The problem is, who knows how many smokers there are?

      I believe ASH, as you say, have it at 21% in the UK. I saw a Eurostat survey that said 28%.

      But then I believe HMRC estimate that a third of tobacco products smoked in the UK are either illegal or imported legally from abroad. This figure may of course be higher, given the nature of it. Does this affect the number of people who are presumed to smoke?

      Then I saw a recent survey (sorry can’t remember where) that said something like a third of “non-smokers” are actually “social smokers” – they’ll have 4 or 5 ciggies or a cigar or two when they’re out. But as they cadge them rather than buy them and as they don’t smoke every day, they identify themselves as “non-smokers,” when asked. This percentage certainly tallies with my social group and further throws the figures out of whack.

      In addition, I saw another study a few months back that said that people were not admitting to being smokers, when asked. Whether this is due to shame (or apprehension) due to the ongoing denormalisation campaign or people being wary of adverse reactions (withdrawn health care, higher insurance etc), who knows?

      (Sorry I have no links for the above – I’m going entirely on memory).

      But whatever, it seems unlikely we’ll ever know for sure how many smokers there actually are. But as you say – this is irrelevant. What matters is that tolerance and respect be accorded to all groups (and yes, I really have seen commenters at the Guardian site boast of their “liberalism” then argue that all people should be treated so…. except smokers. How they can live with such cognitive dissonance, I’ll never know).

      • nisakiman says:

        The issue of the percentage of smokers is an interesting one, and one which I’ve touched on before.

        I live in a country that:
        a) Has a tendency to ignore silliness like smoking bans, and
        b) Is a popular tourist destination for Brits.
        So I get to see the Brits here on their summer hols in a situation where there is absolutely no stigma attached to smoking and they can both enjoy a postprandial fag at the table after a nice meal, and then go for a comfortable drink and smoke to their heart’s content at a bar. They won’t attract even so much as a frown. Ashtrays will be regularly changed, and they will be made to feel welcome.

        I’ve never actually done a headcount, so I can’t be anywhere exact on this, but I would estimate that of the Brits I see around me on holiday here, approximately 60% – 70% are smokers. That is a wildly different figure to the 21% touted by TC. There is of course the possibility that there is a preponderance of people from the lower socio-economic groups, but I see plenty of white-collar workers here too.

        My daughter, her husband and their kids have been here for the last two weeks. Both she and her hubby describe themselves as non-smokers. And indeed, they don’t smoke at all during the day. But once the kids are in bed, they’ll sit out on the balcony and virtually chain-smoke. They easily get through a pack of twenty between them in an evening. And they are non-smokers…?

        One wonders how many more there are like my daughter and her fella.

    • Frank Davis says:

      Welcome to our smoky little pub, Joe.

      I agree about getting the statistics right, but I wonder if it’s ever possible to do so. I use 25% because that’s what I remember it as being a few years ago. The ‘official’ figure may well now be 21%. But is it accurate? A while back I read an article by one of the French academics (whose name escapes me – Professor Molimard) in which he said that smoking prevalence was estimated using telephone polling, and that it was highly inaccurate. In fact, this is generally true of all tobacco statistics. So my view is that all these various numbers should be quarantined before being accepted. There may well be exactly 21% of the adult population who smoke, but it may equally be 15% or 25%. And in Ireland I believe that the prevalence of smoking has actually increased since their ban came in.

      But my Multiplier post isn’t really concerned with accuracy (my own survey results are as questionable as any other statistics), but with the principle that a relatively small effect can be ‘multiplied’ up.

      • Rose says:

        I haven’t told any official that I smoke since about 5 minutes before filling in the 2001 census. I just had this hunch.

  24. Mr A says:

    Ah. Frank, looks like a comment may have gone in the spam filter due to hyperlinks. May have done a double post because of it.

  25. GaryK is correct about the stat games with the fast food joints etc. And this is also a true observation: “In the summer of 2007, when the ban came into effect in England, we all went to the pub as usual and lots of us sat outside laughing and having a jolly time. In 2008, there were far fewer of us. In 2009, that scenario vanished. Which shows that the effect of bans is a gradual process.” If you go to Chris Snowdon’s blog and dig down a while you’ll find a cross-country analysis he did of pub closings 12, 24, and 36 months after bans kicked in. He found a very regular pattern of increase, completely and totally unrelated to “increase in taxes” etc that showed different timings of pub closings for different countries relating directly to the bans.

    – MJM

  26. Monty says:

    I am one of the smokers who has made a major disinvestment in the economy. I never go to pubs or even restaurants. I don’t care if they have a smokers garden or not, I don’t pay people money to banish me to stand in the rain, make me leave my drink behind in the lounge, then clear it away while I am outside having a cigarette. Stuff that idea. Neither do I spend any money at any other place that makes me unwelcome, so that’s hotels, the transport system, cruise liners, shopping centres, cinemas, theatres. I used to be a spendthrift, but no longer.
    And I am saving a whole mint of money as a result, and I don’t miss any of that stuff.
    Thing is, I like accumulating that money. I have become accustomed to my new reclusion. I can stay home, do what I like, and it’s very cheap, almost free, and I don’t have to endure any bleating and whining. And I still get to converse, and meet people, and socialise. Here, for a start. But I can also wander along the beach, and through the meadows. Life does not have to be sedentary.
    If that ban was repealed, I still wouldn’t want to go back to the old establishments. So don’t expect to see the colour of my money any time soon.

  27. GDF says:

    Monty – you said exactly what I would say. I would add that I am finally at the stage of my life when I actually HAVE a little extra cash (kids just about grown!). It’s the point when I might have done things like travel, take the family out to dinner, go on vacations… However, now — there’s no place to go. Or no place I WILL go anyway.

    • nisakiman says:

      As I mentioned in my comment above, where I live (Greece) you wouldn’t know there is a smoking ban. It is almost universally ignored. So if you want a holiday somewhere that you won’t be made to feel like a pariah if you smoke, this is the place. Ashtrays are always provided.in bars and restaurants. (At least, all the ones I go to, and I get around!)

      • Grrr… I can’t lay my virtual finger on it at the moment, but SOMEWHERE there’s a wonderful URL of the Greek demonstration against their ban showing a wonderful crowd of ticked off bar/restauranteur folks facing down a line of fully-outfitted riot police!

        :)
        MJM

      • kin_free says:

        I second that nisakiman. Went to Corfu in late July (3 hour flight) – beautiful place and smoking was the norm everywhere (except the airport!!). Cost of living is about the same as at home in UK but cigarettes are cheaper than in Spain. Greece is a country that deserves our support and I would recommend it. I thought it was fairly quiet however. I believe that it has an official smoke ban on a par with the UK – maybe smokers aren’t aware that their smoking ban is totally ignored and not enforced, or people are worried that the trouble (riots etc) we have seen in Athens extends all over Greece. It doesn’t. I am reliably informed that all the Greek islands are trouble free – Go support them! .

  28. Monty says:

    The thing that isn’t happening is the spending elsewhere. There’s no displacement of spending from the pubs/ hotels/ restaurants to other sectors of the economy. That’s because smokers are no longer welcome anywhere. What on earth does that fool Arnott imagine we are going to do with the money we are saving, buy loads of stuff we don’t want or need?
    Our local public house is on its last legs. They only keep going by hiring out their beer garden for private parties (smokers are allowed in the garden), and complaints are starting to build up about the noise from the loud music and fireworks. So that can’t go on for much longer. They have “re-invented” their business several times over, installed a childrens play area with swings etc to attract families. Well all they get is people going in there, buying a glass of orange juice, and making that last all afternoon while their bairns play on the equipment. If you go in there now, it’s not like being in a pub, it’s more like the baby clinic but with no magazines to read. There’s no buzz of conversation. Their food service is now down to chilli and chips with maybe a vegetarian option, and it’s all frozen and microwaved. Those non smokers who were going to come flooding in to compensate for the displaced smokers either aren’t spending, or they aren’t even crossing the threshold. They fall into three categories- the ones who used to go and enjoy the company of friends who were smokers, the ones who never went because the whole pub scene didn’t interest them, and finally the tiny minority for whom smoke in the air was a deal breaker. The entire hospitality sector has been trashed to suit that tiny minority, and even they don’t rise to the occasion.
    So if you want to find a commercial sector that is actually growing, look at the contractors who go in to board up empty properties when businesses go under.

  29. Pingback: Common People | Frank Davis

No need to log in

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s