Hanson Responds to Viscusi
responses contain several tensions. For example, he claims that
compensation would remove from smokers the "proper
incentives" by providing injured smokers a windfall. But
that claim does not square easily with his observations that
compensation would require smokers to pay a higher price for
cigarettes and that compensation would often be for fatal
diseases. Additionally, a careful reading reveals that
Viscusis conclusions rest on conflicting views of both
legislatures and juries. Finally, Viscusi begs two telling
questions when he asserts that "there has never been the
need for litigation and billions of dollars of lawyers
fees" to pass certain types of "uncontroversial"
restrictions on youth smoking: first, why were such restrictions
never previously passed?; and, second, why doesnt Viscusi
view those restrictions as "wrong-headed" or
illegitimate given that smoking is self-financing and that
underage smokers overestimate the risks?
My main disagreement with
Viscusi stems from his narrow and peculiar definition of
deterrence. His analysis downplays certain conventional
deterrence goals, such as encouraging manufacturers to produce
safer cigarettes. More generally, he wrongly indicates that there
can be no deterrence justification for regulating a product that
is, in the aggregate, "self-financing."
Just because an analysis is
cold and abstract does not imply that it constitutes good
economics, much less sound policy analysis.
Viscusi Responds to Hanson
Proper economic accounting
shows that on balance there is a cost savings to all states from
smoking. While this result may not be a pleasant message, it
underscores the fallacy of using social financial cost arguments
in instances in which such costs do not exist. Even if one
arbitrarily excluded the negative insurance cost effects, my
estimates show that recognizing excise taxes alone makes
cigarettes self-financing for every state. Since the proposed
settlement is tantamount to an excise tax, there is no conceptual
reason to disregard the taxes already paid.
My 1992 book, Smoking:
Making the Risky Decision, proposed a system for comparative
cigarette risk ratings, and Professor Hansons tax based on
riskiness is in the same vein. It is noteworthy, however, that
each of our approaches is at odds with the state lawsuits and the
views of many public health officials, who inexplicably deny that
there are differences in cigarettes riskiness.
As for smoking risk
beliefs, over 90 percent of the adult population overestimates
the risks of smoking. Tort law remains guided by the
"reasonable person" standard, not by concern with the
few people locked in a cave for the past half century. Knowledge
of the substantial hazards of smoking is not insider information
possessed only by anti-smoking zealots.