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The Economic Benefits of Smoking

The economic effects of the tobacco industry vary depending on the analysis methods used and the region being studied. For example, World Bank Senior Economist Howard Barnum analyzed the effects of tobacco consumption on producers and consumers, factored in the costs or morbidity and mortality and concluded that the world tobacco market produces an annual global net loss of $200 billion. However, other data show that there are economic benefits to tobacco, including economic stimulation, tax yields and even early death.

  1. Farming jobs

    • The tobacco industry estimates that about 33 million people worldwide are employed by tobacco farming, according to the 1999 World Bank report "Curb the Epidemic." About 15 million of those workers were in China.

      CNBC reported in 2008 that in the United States, the tobacco industry had experienced a recent boom due to rising global demand. Yet in 2010, an Associated Press report alleged that tobacco companies were significantly cutting their tobacco purchases from American farms. This was attributed in part due to declining smoking among U.S. citizens and increased competition from overseas farms.

    Taxation

    • Taxes on cigarettes have always contributed to government coffers. In 2009, though, President Barack Obama passed an act that increased the federal tax rate on cigarettes from 39 cents to $1.01 per pack. This amounted to a 13.3 percent increase in the cost of cigarettes.

      Moreover, in early 2010, health advocates proclaimed if a similar tax is levied by state governments, it could earn more than $9 billion a year for those governments, according to a report by Reuters news service.

    Early Death

    • The most controversial among the purported economic benefits of smoking is the benefit afforded by smokers whose deaths allegedly save governments money on health care. According to a report commissioned by the tobacco giant Philip Morris, Inc., and released in 2001, the Czech Republic saved about $147 million in 1997 as a result of early deaths, due to smoking, that prevented citizens from incurring health care or elderly-care costs.

      The report was commissioned by the tobacco company in an attempt to combat recent claims about the fiscal wisdom of cigarette taxes. However, after the study's conclusions were released, Philip Morris spokespersons strove to distance the company from the findings and expressed deep regret over the loss of human life caused by smoking.

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