Smoke-Filled Rooms: A Postmortem on the Tobacco Deal (Studies in Law and Economics) - Hardcover

Viscusi, W. Kip

9780226857473: Smoke-Filled Rooms: A Postmortem on the Tobacco Deal (Studies in Law and Economics)

Hardcover

ISBN 10: 0226857476 ISBN 13: 9780226857473

Publisher: University of Chicago Press, 2002

The 1998 out-of-court settlements of litigation by the states against the cigarette industry totaled $243 billion, making it the largest payoff ever in our civil justice system. Two key questions drove the lawsuits and the attendant settlement: Do smokers understand the risks of smoking? And does smoking impose net financial costs on the states?

With Smoke-Filled Rooms,W. Kip Viscusi provides unexpected answers to these questions, drawing on an impressive range of data on several topics central to the smoking policy debate. Based on surveys of smokers in the United States and Spain, for instance, he demonstrates that smokers actually overestimate the dangers of smoking, indicating that they are well aware of the risks involved in their choice to smoke. And while smoking does increase medical costs to the states, Viscusi finds that these costs are more than financially balanced by the premature mortality of smokers, which reduces their demands on state pension and health programs, so that, on average, smoking either pays for itself or generates revenues for the states.

Viscusi's eye-opening assessment of the tobacco lawsuits also includes policy recommendations that could frame these debates in a more productive way, such as his suggestion that the FDA should develop a rating system for cigarettes and other tobacco products based on their relative safety, thus providing an incentive for tobacco manufacturers to compete among themselves to produce safer cigarettes. Viscusi's hard look at the facts of smoking and its costs runs against conventional thinking. But it is also necessary for an informed and realistic debate about the legal, financial, and social consequences of the tobacco lawsuits.

People making $50,000 or more pay .08 percent of their income in cigarette taxes, but people with incomes of less than $10,000 pay 1.62 percenttwenty times as much. The maintenance crew at the Capitol will bear more of the "sin tax" levied on cigarettes than will members of Congress who voted to boost it.

Cigarettes are not a financial drain to the U.S. In fact, they are self-financing, as a consequence of smokers' premature mortality.

The general public estimates that 47 out of 100 smokers will die from lung cancer because they smoke. Smokers believe that 40 out of 100 will die of the disease. Scientists estimate the actual number of 100 smokers who will die from lung cancer to be between 7 and 13.

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From the Inside Flap:

The 1998 out-of-court settlements of litigation by the states against the cigarette industry totaled $243 billion, making it the largest payoff ever in the American civil justice system. The companies entered into this settlement to drastically narrow the scope of future tobacco litigation, but instead it has spawned a new wave of litigation.

Two questions were central to the litigation and remain central to the smoking policy debate. Those questions-do smokers understand the risks of smoking, and does smoking impose net financial costs on the states?—are at the heart of W. Kip Viscusi's Smoke-Filled Rooms.

Viscusi provides surprising and compelling answers to these questions, drawing on an impressive body of data. Based on surveys of smokers in the United States and Spain, for instance, he demonstrates that smokers actually overestimate the dangers of smoking, indicating that they are well aware of the risks involved in their choice to smoke. And while smoking does increase medical costs to the states, Viscusi finds that these costs are more than financially balanced by excise taxes and the lower demands smokers place on state pension and health programs, so that, on average, smoking either pays for itself or generates revenues for the states.

Viscusi's research and his conclusions-not only about the risk assessment of smokers and the societal costs of smoking but also about the dangers of second-hand smoke and the disturbing ways the tobacco windfall is being spent by the states-radically reconfigure the terms of the smoking debate. As a step in this direction, he includes policy recommendations that call on federal authorities to adopt a new warnings system and to encourage development of safer cigarettes. Smoke-Filled Rooms takes a hard look at the economic realities of smoking. In some respects, it runs against the grain of conventional thinking. But its perspective provides for an informed and realistic debate about the legal, financial, and social consequences of the tobacco lawsuits.

About the Author:

W. Kip Viscusi is the John F. Cogan Jr. Professor of Law and Economics and director of the Program on Empirical Legal Studies at Harvard Law School. He is the author, coauthor, or editor of a number of books, including Smoking: Making the Risky Decision and Punitive Damages: How Juries Decide, the latter published by the University of Chicago Press.

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