Value of Life - Tobacco Industry

Tobacco Industry

The cigarette industry was particularly concerned with Value of Life calculations since it came under regular attack in the 1980s and 1990s for the "Social Cost" of smoking on the national economy. The economic arguments for increasing excise taxes on cigarettes was that these taxes compensated the State for a whole range of externalities that smoking imposed, including the costs of hospital and medical care for smokers and non-smokers alike, disability pensions for smoking-related diseases, welfare payments made to surviving spouses, the cost of street, home and office cleaning, the burden of home and forest fires, etc.

To counter this argument, the tobacco industry was increasingly forced to fall back on calculations made by a network of employed academics, who were paid to write op-ed articles from their local newspapers expressing the opinion that smokers already 'paid their way'. They relied on an argument by Kip Viscusi which became known as the "death benefits" -- the idea that, since smokers died earlier than non-smokers, the nation was being saved hospital, pension and nursing-home costs, and that these offset many of the external costs .