Anti‐Smoking Policies and Smoker Well‐Being: Evidence from Britain

Abstract

Anti-smoking policies can in theory make smokers better off, by helping smokers with time-inconsistent preferences commit to giving up or reducing the amount they smoke. We use almost 20 years of British individual-level panel data to explore the impact on self-reported psychological well-being of two policy interventions: large increases in tobacco excise taxes and bans on smoking in public places. We use a difference-in-differences approach to compare the effects on well-being for likely smokers and non-smokers. We find robust evidence that increases in tobacco taxes raise the relative well-being of likely smokers. Exploiting regional variation in the timing of the smoking ban across Britain, we find no evidence that it raised smoker well-being. Our * Submitted August 2014. Anti-smoking policies and smoker well-being 225 findings give some support to the view that tobacco taxes are at least partly justifiable because of the benefits they have for smokers themselves. Policy pointsr Theories of time-inconsistent behaviour imply that smokers with selfcontrol problems may benefit from policies that increase the cost of smoking. This is because such measures can help smokers achieve their goals of cutting down or quitting.r We find evidence in a British panel covering the years 1991-2008 that the subjective well-being of likely smokers increases more than that of people less likely to smoke when tobacco taxes increase. While the sizes of the estimated effects are modest, they are indicative of self-control problems among smokers. We do not find similar effects for a smoking ban.r These results suggest an additional justification for tobacco taxation: such taxes correct not only for costs that smokers impose on others but also for costs that smokers with self-control problems impose on themselves.r If poorer smokers suffered from greater self-control problems, then it would suggest that the costs and benefits of tobacco taxation are more progressive than a standard analysis would suggest. However, we do not find evidence that smokers with low education (and hence lower lifetime income) suffer from greater self-control problems.

IFS Green Budget 2016

“…The government's motivation for introducing such a target is the desire to reduce public sector debt as a share of national income more 17 The spending item in question is funding for temporary accommodation. 18 The Treasury argues that the reallocation to local authorities will tend to put downward pressure on spending in this area because overall local government grants are being cut considerably -see Chapter 6.…”

“…However, because the mere fact of reallocating this spending from central to local government may put downward pressure on this element of spending, this transfer has been treated as a policy change and the entire cost of the grants has been taken out of scope. 18 It is highly doubtful that this stream of spending will be reduced to zero as a result of the policy change, so at the very least the government's performance relative to the cap is flattered by the reclassification of this spending item. This somewhat opaque method of meeting the cap does little to enhance what was left of its credibility.…”

“…17 Increasing the personal allowance by a further £600 and raising the higher-rate threshold to £50,000 would cost around £8 billion. 18 This is a significant additional cost (amounting to around 3½% of income tax revenues forecast for 2020-21) that has not yet been factored into the official forecasts. As the 17 Current policy is for the personal allowance to be increased to £11,200 by April 2017 and for the higher-rate threshold to be increased to £43,600 by that point.…”

“…Thereafter, both are set to be increased in line with the CPI. The latest OBR forecasts are for CPI inflation of 6% between September 2016 and September 2019 (see 18 The HMRC ready reckoner suggests that each £100 increase in the personal allowance reduces revenues by £800 million a year, while a 10% increase in the basic rate limit reduces revenues by £3.3 billion a year (see https://www.gov.uk/government/statistics/direct-effects-of-illustrative-tax-changes).…”

“…Around 80% of public sector workers are members of a defined benefit pension scheme (compared with slightly over 10% in the private sector), 18 and from 2016-17 it will no longer be possible for those with such pensions to contract out of part of the state pension by paying lower National Insurance contributions (NICs). This means that employees will have to pay 1.4% more National Insurance on all earnings between the lower earnings limit and the upper accrual point: this equates to a reduction in takehome pay of up to around £480 per year.…”