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The Governmental Composition of the Insurance Costs of Smoking

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  • Viscusi, W Kip

Abstract

The estimated health risks from smoking have significant external financial consequences for society. Studies at the national level indicate that cigarettes are self-financing since external costs such as those due to illnesses are offset by cost savings associated with premature death, chiefly pension costs. This paper extends this analysis to all 50 states and considers the costs considered in the state attorneys general suits against the cigarette industry. Cigarettes are always self-financing from the standpoint of costs to each state. The extent of the cost savings is less than at the federal level. However, smokers' higher medical costs are outweighed by reduced nursing home expenditures, lower pension costs, and excise taxes, where each of these factors alone usually exceeds the medical cost effect. Copyright 1999 by the University of Chicago.

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  • Viscusi, W Kip, 1999. "The Governmental Composition of the Insurance Costs of Smoking," Journal of Law and Economics, University of Chicago Press, vol. 42(2), pages 575-609, October.
  • Handle: RePEc:ucp:jlawec:v:42:y:1999:i:2:p:575-609
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    File URL: http://dx.doi.org/10.1086/467435
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    References listed on IDEAS

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    1. Becker, Gary S & Grossman, Michael & Murphy, Kevin M, 1994. "An Empirical Analysis of Cigarette Addiction," American Economic Review, American Economic Association, vol. 84(3), pages 396-418, June.
    2. Wasserman, Jeffrey & Manning, Willard G. & Newhouse, Joseph P. & Winkler, John D., 1991. "The effects of excise taxes and regulations on cigarette smoking," Journal of Health Economics, Elsevier, vol. 10(1), pages 43-64, May.
    3. repec:aph:ajpbhl:1997:87:5:755-759_9 is not listed on IDEAS
    4. Chaloupka, Frank, 1991. "Rational Addictive Behavior and Cigarette Smoking," Journal of Political Economy, University of Chicago Press, vol. 99(4), pages 722-742, August.
    5. Grossman, Michael, 1991. "The demand for cigarettes," Journal of Health Economics, Elsevier, vol. 10(1), pages 101-103, May.
    6. Gary S. Becker & Casey B. Mulligan, 1997. "The Endogenous Determination of Time Preference," The Quarterly Journal of Economics, Oxford University Press, vol. 112(3), pages 729-758.
    7. repec:aph:ajpbhl:1983:73:8:911-914_1 is not listed on IDEAS
    8. Douglas, Stratford & Hariharan, Govind, 1994. "The hazard of starting smoking: Estimates from a split population duration model," Journal of Health Economics, Elsevier, vol. 13(2), pages 213-230, July.
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    Cited by:

    1. David M. Cutler & Jonathan Gruber & Raymond S. Hartman & Mary Beth Landrum & Joseph P. Newhouse & Meredith B. Rosenthal, 2002. "The Economic impacts of the tobacco settlement," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 21(1), pages 1-19.
    2. Usher, Dan, 2001. "Personal goods, efficiency and the law," European Journal of Political Economy, Elsevier, vol. 17(4), pages 673-703, November.
    3. Cutler, David M & Epstein, Arnold M. & Frank, Richard G. & Hartman, Raymond & King, Charles III & Newhouse, Joseph P. & Rosenthal, Meredith B. & Vigdor, Elizabeth Richardson, 2000. "How Good a Deal Was the Tobacco Settlement? Assessing Payments to Massachusetts," Journal of Risk and Uncertainty, Springer, vol. 21(2-3), pages 235-261, November.
    4. Frank A. Sloan & Justin G. Trogdon, 2004. "Litigation and the Political Clout of the Tobacco Companies: Cigarette Taxes, Prices, and the Master Settlement Agreement," HEW 0411002, EconWPA.
    5. W. Kip Viscusi & Joni Hersch, 2010. "Tobacco Regulation through Litigation: The Master Settlement Agreement," NBER Chapters,in: Regulation vs. Litigation: Perspectives from Economics and Law, pages 71-101 National Bureau of Economic Research, Inc.
    6. Schnellenbach, Jan, 2012. "Nudges and norms: On the political economy of soft paternalism," European Journal of Political Economy, Elsevier, vol. 28(2), pages 266-277.
    7. Mariana Conte Grand & Pablo Perel & Raúl Pitarque & Gustavo Sánchez, 2003. "Estimación del costo económico en Argentina de la mortalidad atribuible al tabaco en adultos," CEMA Working Papers: Serie Documentos de Trabajo. 253, Universidad del CEMA.
    8. Mariana Conte Grand, 2005. "Reestimación y actualización del costo económico en Argentina de la mortalidad atribuible al tabaco en adultos," CEMA Working Papers: Serie Documentos de Trabajo. 305, Universidad del CEMA.

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