Jon Hanson
Yes. The cigarette market appears to fail in two important respects. First, although consumers have long understood that smoking can be dangerous, there is considerable evidence that many smokers underestimate the personal risks to themselves of smoking, overestimate the relative safety of the particular brand of cigarettes they smoke, overestimate the relative significance of many non-smoking risks, and underestimate the addictiveness of smoking. Moreover, there is growing evidence that manufacturers failed to make safer cigarettes when they could have, intentionally understated the risks of smoking, actively created doubts among smokers regarding the health effects and addictiveness of smoking, successfully targeted underage consumers in their marketing campaigns, and so on. In short, had smokers been truly well informed of the risks of smoking and of the industry conduct that created those risks, many likely would have altered their decisions regarding whether to begin or continue smoking. Second, even to the extent that consumers are adequately informed, they nevertheless externalize a significant portion of smoking-caused costs to their insurers — both private and public. To that extent, consumers behave as if they underestimate the risks of smoking. Those two sources of market failure provide a powerful justification for cigarette-manufacturer liability.

W. Kip Viscusi
The primary objective of tort liability is deterrence, but smokers already know and overestimate the risks. The reason why the cigarette industry has won decades of tort liability suits filed by smokers is simple. The substantial hazards posed by smoking are perhaps the best-known risks in society. Smokers knowingly incur these risks, and juries have been justifiably unsympathetic to these claims. For over three decades there have been product warnings on cigarette packs and in cigarette ads, limitations on cigarette advertising, and annual reports by the U.S. surgeon general.

Consumers overestimate the risks associated with smoking rather than underestimate the hazards. My studies of lung cancer risk perception, mortality risk beliefs, and assessed life expectancy loss all indicate that smokers overestimate the risks. The extent of the overestimation is reflected in the fact that if smokers assessed the hazards of smoking accurately as opposed to over-assessing the risk, then societal smoking rates would rise by 6.5 to 7.5 percentage points, increasing the size of the U.S. smoking population by more than one-fourth.

From the standpoint of social policy, the idea of conferring windfall gains on people who have chosen to incur the substantial risks associated with smoking is certainly wrong- headed. Tort liability awards to smokers would confer lottery winnings on people who have chosen to incur well-established risks. Smokers will simply pay higher prices to cover the costs of liability judgments. In effect, smokers will be forced to purchase tickets for a lottery whose winnings they will not enjoy once they are dead.