Costs of Smoking: Auld edition

Chris Auld makes the very sensible point that we cannot tally smokers' costs to the public purse by simply adding up the cost of treating smokers; rather, we need to compare the total lifetime costs of smokers with the total lifetime costs of non-smokers. I'd add that we'd also have to adjust for that smokers would likely be greater health risk takers even absent smoking. That's at pretty strong variance with the procedure that New Zealand's Ministry of Health used.

But Auld raises the more interesting question: what happens if leading a healthy lifestyle winds up costing the government more because you spend longer as a superannuitant and you wind up dying of prolonged aging-related diseases rather than the quicker and cheaper vice-related diseases?

If healthy behaviors wind up increasing lifecycle health care costs, we should either subsidize less than we otherwise would, or perhaps even tax, healthy behaviors. Healthy behaviors in this scenario benefit the person exhibiting the behavior but impose costs on everyone else, and this logic demands that we discourage healthy behavior relative to whatever policies we would otherwise have enacted.

This argument does not sit well with me. I dislike the argument that we should penalize smokers because of the health care costs of treating smoking-related illnesses, and I dislike the argument that we should penalize non-smokers because of the health care costs of treating smoking-related illnesses. These external effects smack of standard pecuniary externalities—externalities that operate through market mechanisms and do not require policy to fix, although they are not conventional pecuniary externalities per se. The perverse aspects of arguing that we need to control externalities which are artifacts of government programs is illustrated more forcefully by studies which treat the cost of investigating, arresting, and imprisoning illicit drug users as external costs of drug use itself! (“We are arresting you for this doobie.” “Why?” “Because the costs of arresting you are a negative externality!”)

Cost of drug use figures that count the costs of enforcing prohibition regimes are best deemed police agitprop.