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Commentary

Market Forces Should Regulate Smoking


     
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Restaurants and bars in Lubbock, Texas, have become the most recent target of anti-smoking zealots pushing their prohibitionist agenda. Activists claim that they need to prohibit smoking in order to protect the non-smoking customers and workers in these establishments. These activists fail to appreciate how respecting the freedom of property owners to determine their own policy, coupled with market forces, already achieves efficient regulation.

Everyone knows that second-hand smoke can have negative health consequences. If smokers do not take account of the impact that their second-hand smoke has on others, it would seem like a classic case of a market failure where leaving people free to make their own decisions leads to an inefficiently unhealthy outcome.

Kelsie Bernstein, the secretary of the West Texas Smoke-Free Coalition, stated that “comprehensive (anti-smoking) ordinances are designed in large part to protect those individuals who have chosen not to smoke.” Coalition co-Chair Matthew Harris elaborates: “The employees that are working in these conditions day in and day out are subjected to second hand smoke... They can’t get away from it (for) the entirety of their eight-hour plus shift.”

The campaign is beginning to have an impact on city officials. Councilwoman Latrelle Joy said, “I think we need to look at the ordinance and see if we can’t do something that will protect people who may not have choices.”

But who does not have any choices? Lubbock has approximately 500 bars and restaurants (excluding fast food restaurants). The vast majority of them are non-smoking. Consumers choose which establishments to patronize, and workers choose which ones to work for.

The choices of both consumers and workers regulate smoking in Lubbock. There is no “market failure” because the smoking occurs in privately owned businesses that reap the rewards, or bear the consequences, of their smoking policy.

Bar or restaurant owners have to weigh the benefit, to some people, of being able to smoke, against the cost to other people of being harmed by second-hand smoke. They measure this by expected profits.

Allowing smoking increases the willingness to frequent establishments by some customers while it drives others away. If workers view second-hand smoke as a cost, then they require higher income in order to accept work at a smoking establishment rather than a non-smoking establishment. Employers weigh all of these factors against each other and decide on whether or not to allow smoking.

These market forces regulate smoking and lead to the mix of policies we see in Lubbock today, where some bars allow smoking while others do not and the vast majority of restaurants prohibit smoking. The mix looks a lot different now than it has in the past, because norms surrounding smoking have changed and proprietors have had to adjust smoking policies accordingly.

This market-based regulation leads to roughly optimal smoking policies. All of the “spillovers” from second hand smoke fall on proprietors who make profits or suffer losses based on how well they regulate smoking for the benefit of those who enjoy smoking against the negative impacts on those who don’t.

Sound policy analysis requires weighing both the pleasure of smokers and displeasure of non-smokers, as measured by their willingness to pay for services in places that allow smoking or prohibit it. Any such analysis leads to the conclusion that ordinances that forcibly prohibit smoking are inefficient because market forces already regulate cities to a roughly optimal mix of policies in different establishments.

But the nationwide push for banning smoking in bars and restaurants is not about optimal regulation. It’s about America’s busy bodies, nannies, and petty tyrants trying to control the lives of the rest of us.

When property owners are left free to determine how to regulate smoking, consumers and workers vote with their dollars to best regulate smoking. When regulation is delegated to politicians, our freedom shrinks while the authoritarian desires of “those who know best” are indulged. Lubbock should choose freedom.


Benjamin Powell is a Senior Fellow at The Independent Institute, Director of the Free Market Institute at Texas Tech University, and former President of the Association of Private Enterprise Education. Dr. Powell received his Ph.D. in economics from George Mason University. He has been Assistant Professor of Economics at San Jose State University, Associate Professor of Economics at Suffolk University, a Fellow with the Mercatus Center's Global Prosperity Initiative, and a Visiting Research Fellow with the American Institute for Economic Research. He is also the editor of the Independent Institute books, Housing America: Building out of Crisis and Making Poor Nations Rich.






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