Forget food and water, I want my candy and cigarettes

After looking at state excise tax rates for cigarettes, I have become intrigued with the relationship between smoking and recession. I will continue to delve into how smoking rates and cigarette sales are affected by recession. Common sense would say that cigarette sales would decline in recession. Smoking cigarettes is not necessary for survival, so when Americans have to make budget cuts, shouldn't cigarettes be the first to go? Not necessarily.

I found an article from USA Today that actually reports that despite financial difficulties, consumers are not prepared to forgo their "guilty pleasures" - alcohol, cigarette and candy makers are all reporting healthy sales amid the economic gloom. I will note that this article was written from London a little over a year ago, but I believe its message is not outdated as the world economy continues to struggle and is applicable to the United States.

Some interesting pieces of information I found in the article:

"Sin stocks, ranging from gambling to liquor, are usually a safe bet in hard times. While shares in some of those companies have fallen along with stock exchanges this year, lots are still seeing strong revenues and sales."

"It's inelastic demand as far as many of these stocks are concerned," said Hargreaves Lansdown analyst Keith Bowman, using the economists' term for consumption that is not deterred by higher prices. "So far there's signs that they are holding up, although there's still concern that these industries will see some impact.

Inelastic demand is usually a term prescribed to goods that are necessities (think bread or milk). Are cigarettes a necessity for one who is a regular smoker?

Philip Morris International (PM) said its earnings rose 23% in the second quarter and it raised its earnings forecast for this year, saying it had not been affected by inflationary pressures like other consumer products companies.

"Cigarettes in general can withstand such an environment better than many consumer products," Chief Financial Officer Hermann Waldemer said at the time.

Although these statistics are from August 2008, a more recent stock update from October 2009 reports that although volumes disappoint for Philip Morris and RJ Reynolds in the past 3rd quarter, their profits are beating expectations of analysts. CNNMoney.com also reports Philip Morris International as #14 in the Fortune 500's Biggest Winners.

I also found a more recent article from BBCNews.com that says that many smokers have been unable to quit because of increased stress caused from financial worries. Its findings are reported from a study of 877 smokers and ex-smokers commissioned by McNeil Products Ltd, which makes nicotine replacement therapy products. Although this study has interesting findings, knowing McNeil Products manufactures nicotine replacement therapy products may expose a potential conflict of interest. The company may hope to exploit people's increased stress levels by telling them they can quit smoking but still relieve their stress with their nicotine therapy products. However, the poll in the article did find that people are willing to cut in other areas in order to continue smoking, a fact I found interesting:

"Some 42% of respondents admitted they were more likely to cut spending on clothes, and 21% said they were more likely to try to cut down their weekly supermarket shop."

An article from Reuters written in March this year offers support for the other end of this argument, proposing that a big hike in the federal tax on cigarettes will lead to decreased smoking rates:

Danny McGoldrick, the Campaign for Tobacco-Free Kids advocacy group's vice president for research, said the formula is simple: as prices rise, fewer people buy cigarettes.

McGoldrick forecast the tax hike will persuade just over 1 million current smokers to quit and prevent 2 million children from starting. These changes will avert about 905,000 smoking-related deaths and save $44.5 billion in healthcare expenses over time, McGoldrick predicted.

The article also notes that U.S. smoking rates have been slowly declining for decades and that rates are often higher where state tobacco rates are lower.

Are smoking rates completely determined by economics, or do other factors play a role in the big picture of why choose or choose not to smoke? What is more important to consumers, losing their hard earned cash or losing their sanity?

A Smoke Free Initiative

This past Thursday (November 12) I attended the "Smoke Free University Session" which was at 4:30 P.M. in Palmer Commons. The session's goal was to create an open discussion in which diverse opinions can be heard. This session is the first of many sessions to discuss the Smoking Ban on all UM Campuses (Ann Arbor, Dearborn and Flint). These sessions are the first step taken by the Smoke Free University Steering Committee, which was formed by President Coleman after her announcement of the smoking ban, which will be effective July 1, 2011. The decision for the ban was made by President Coleman to fulfill her goal of a healthy campus community. The Steering Committee, who conducted this session, was not involved in the decision of a smoke free campus, but has been elected by President Coleman to decide the best way to carry out this goal.

The Steering Committee has two co-chairs: Kenneth Warner, Dean of the School of Public Health, and Robert Winfield, U-M Chief Health Officer and Director of the University Health Service. Mr. Warner was present at the session, but his co-chair Mr. Winfield was unable to attend. Mr. Warner sat at the front of the room in the middle of a panel, with various people on either side of him who are the chairs of the various sub-committees, which include:

(1) Faculty, Staff and Affairs

(2) Guests, Events and Athletics

(3) Facilities and Grounds

(4) Student Life

(5) Communications

(Note: when I looked at the Smoke Free Initiative web site, the committee names were slightly different from what the chairs said at this session)

These sub-committees each have about twenty people, with members consisting of: faculty, staff, union representatives, students, smokers, non-smokers and those who have quit smoking. The Student Life Sub-Committee in particular has student representatives from various University Student Organizations, such as: MSA (Michigan Student Assembly), Greek Life and various other undergraduate and graduate students.

This move of the University to go completely smoke free is not seen as a drastic decision, but rather the next step in regulation:

*1987: U-M first adopted a University-wide ban on smoking in buildings (except several designated residence halls) and University vehicles

*1998: Health System prohibited smoking on the grounds and in public places

*2003: RHA (Residence Hall Association) eliminated smoking from all residence halls

*2010: All U-M Campuses will be smoke free

There is also a timeline that the committee will be following in their implementation process:

- Open discussion sessions, such as the one I recently attended

- Focus groups

- Committee's recommendation will be presented to President Coleman in Fall 2010

- Full blown implementation will be July 1, 2011

After the Committee presented this information a Q & A session followed.

A good question that was asked was how does the University plan to implement this policy, and how does it plan on dealing with multiple offenders of the policy?

The committee says that they will be seeking compliance through good will, and that no tickets will be given out to offenders. They are hoping this most recent decision will be a situation similar to previous smoking restrictions, in which enforcement was a non-issue. They say this is an issue that is currently being examined, but that their goal is not to be punitive but to leverage educational opportunities. The committee says they are respectful of those who continue to smoke, but that free behavioral counseling will be offered to students and faculty along with discounts of smoking smoking cessation products. Upon looking on the web site for such services, I found a free support group, but Tobacco Treatment Programs cost $100 for anyone who is not a U-M Employee or a patient with a UMHS Physician Referral. I did not see any offering of discounted smoking cessation products, but perhaps such products and more services will be available as we approach the date of the actual smoking ban.

When asked why this decision was made, one of the women sitting on the panel offered a different answer than President Coleman's goal of a healthy campus community: "Those who choose to smoke cost the University Money." That made me wonder, what truly is the University's goal? Could the true goal be about economics, and the added health benefits of a smoke free campus is simply a perk that goes along with it? Consider this except from the news release found on the Smoke Free Initiative's web site:

"There’s a strong business case for encouraging employees to quit smoking. Male smokers miss 3.9 more days of work per year than non-smoking males, and female smokers miss an additional 2.1 days of work per year. A 1996 study by Warner and colleagues also found that workplace smoking cessation programs reduce health care costs, absenteeism costs, on-the-job productivity losses and life insurance costs."

One woman, who named herself as the President of the Nurses Union and a smoker, voiced her concern that there be a places for nurses to smoke. As a smoker of course, her comments to the committee seemed a tad bitter, but she made an excellent point that received many nods of agreement from those attending the session:

"I don't want anybody telling me how to live my life. A lot of people don't."

Although this may be true, a smoke free University is no longer an idea, but a goal that will be reached by July 2011. If you would like to attend a session such as the one I attended, there will be another session this Thursday, November 19. Click here to find more information and to sign up if you are interested.

Thank you for (not) smoking

I found this video particularly interesting because just yesterday I was Skyping with my friend Mara, who is currently studying abroad in France. I mentioned my blog about smoking, and she said that "true Europeans" (aka the French) view smoking as a way of life - everyone smokes everywhere. She even mentioned that she sees preteen girls standing outside of their middle school smoking cigarettes, which in France is not only seen as socially acceptable, but legal. The video is from December 24, 2007.

Nous vous remercions de (non) fumeurs

Put your money in your mouth, and smoke it

In these hard economic times, it seems like we are all trying to watch what we spend. As college students, perhaps we are feeling the trickle down of the economic burden that faces our parents, but as for right now, most of us do not face this burden ourselves (not until graduation at least!). I mean, it doesn't seem like many college kids can't go out on the weekends because they don't wanna spend money - not by the look of the line at Skeeps on Thursday nights - so obviously our alcohol budgets have not suffered too greatly. Another costly, yet also dirty habit, that many U of M students partake is cigarette smoking. I have not recently bought a pack myself, but cigarettes in Ann Arbor, especially on campus (Campus Corner loves to overcharge on cigarettes - from my personal experience) seem to run around $7 a pack. I come from Grosse Ile, MI, which is only 45 minutes away, and the cigarettes there are much cheaper, running around high $5 to $6 a pack.

So this gets me thinking: if you smoke a pack a day in the city of Ann Arbor @ $7 x 7 days in a week, that is roughly $49 a week spent on a dirty little habit. That is $196 a month and $2548 a year. I don't know about you, but I could think of a lot of things that I could buy for that much money.

Back when I used to smoke cigarettes, we will call it B.Q.C. (Before Quitting Cigarettes), I went to Florida with my friend Mara. I was amazed when I bought a pack of cigarettes and it was under $4 - cheap cigarettes and lots of sun, what isn't there to love about Florida? I also found this extremely strange because every time I got into the car I would hear an anti-smoking PSA. Now why would Florida launch this huge campaign to try to curtail smoking, but keep the prices of cigarettes so low? I was tempted to buy an entire carton and smuggle it back to Michigan in my suitcase. However, I did not - I could never get myself to buy a carton and admit that I smoked that many cigarettes, although I can assure you I probably did in the year or two that I smoked.

This got me thinking about cigarette tax rates. I personally believe that anti-smoking PSA's, especially the ones put out by the Truth campaign, are ineffective and sometimes laughable because they are just that ridiculous. What I do think is more effective, especially during these tough economic times - is hitting smokers where it really hurts - their pockets. According to TobaccoFreeKids.org, the state of Michigan is ranked the 11th highest state in terms of its state cigarette excise tax rate with $2.00 a pack. Florida is ranked 24th, with a tax rate of $1.339 per pack (perhaps cigarettes there are more expensive now, it was probably about two years ago when I bought cigarettes there). South Carolina is 51st with a tax rate of $0.07 a pack, and the highest state-local cigarette tax rate, at which I was not at all surprised, is in New York City:

"The highest combined state-local tax rate is $4.25 in New York City, with Chicago, IL second at $3.66 per pack."

This map shows the state cigarette tax rates in dollars as of May 2009.

Putting the tax rates into perspective, I decided to see if state smoking rates were reflective of their tax rates, which means that many of the southern states (Georgia, Alabama, the Carolinas) would have the highest amount of smokers. But looking at this map that shows the rate of smoking in each state, that seems to not be the case. The accompanying article from CNN.com is a good read, covering many of the topics I have looked at in this blog, such as celebrity smoking and smoking bans in public places. Here is a quote from the article I found particularly interesting:

"According to the CDC, about 43.4 million Americans (19.8 percent of the population) smoke."

also:

"According to the American Cancer Society, each day more than 3,500 people younger than 18 try their first cigarette, and 1,100 others become regular daily smokers."

So even though we are in recession and cigarette taxes are increasingly on the rise, it seems like many Americans are still not willing to give up their dirty little vice. Perhaps those who see it as a stress reliever see that $7 they pay for a pack as a tradeoff for the stress that smoking seems to keep at bay. Okay so maybe it doesn't seem too bad when you look at it that way, but is it worth $2548 each year to keep your stress down? Personally, I'd rather just go for a run to relieve my stress, which has the added benefit of being non-taxable AND non-cancerous.