A Libertarian Argument in Favor of Smoking Bans in Public Places

Ever since the colonial days, smoking tobacco has been a part of American history. Until recent times, smoking was common practice amongst many Americans. Once we realized the side effects of smoking did social norms regarding smoking change for the better. One of the ways in which we see that societal shift is in smoking bans in public places, which ironically enough, include privately owned establishments (e.g., clubs, bars, restaurants). If it is a public domain, such as a government building or a public university, then I do not have a problem with a smoking ban. When we are talking about privately owned establishments, that is the moment I start to take issue with a smoking ban. Normally, I would simply say that a business owner should be able to self-regulate his own property because we are in a free society. However, I cannot treat this like any normal governmental intervention. How so? Unlike so many other policies, this one actually works. A smoking ban creates a cleaner environment, it reduces exposure to second-hand smoke both to customers and employees, has generally high compliance rates, and it does so without causing net economic damage. Plus, it is nice to go somewhere like a restaurant or bowling alley and not have deal with inhaling cigarette smoke or come home smelling like an ashtray. Regardless about how I personally feel about allowing smoking in privately owned establishments, from a philosophical and deontological standpoint, I feel uncomfortable using public policy to coerce business owners into certain business-related decisions, even if this one would be a particularly lousy decision. What I would like to explore is whether the wishes of the proprietor trump any other considerations or whether some other factor(s) can supersede the decision to allow for smoking in one's private establishment.

Economic effects on businesses: One of the arguments used against smoking bans is that it will impose extra costs and drive business away. There are certain businesses that are more adversely affected, such as casinos, taverns, and bingo halls. However, once revenue and employment data are aggregated, the vast majority of studies show that a smoking ban hardly has an effect, and could very well improve the establishment (Alamar and Glantz, 2004). As the St. Louis Federal Reserve points out, the effects both on employment rates and business' revenue are aggregately, at best, negligible. The National Institutes of Health (NIH) also found that there are no negative economic effects on employment or sales. (Also, see the MN House of Representative's Office, Centers for Disease Control and Prevention [CDC], Bartolome and Irvine [2010]). The fact that a government ban can be implemented without negatively impacting a business is, in my humble opinion, quite impressive.

Health care costs: Those who are in favor of smoking bans argue that it will not only cut back on inhalation of second-hand smoke, but will also cut back on people who actually decide to smoke. Let's suppose that the partial ban succeeds in decreasing the amount of smokers, which they do (Evans et al, 1996). Much like I illustrated with the cigarette tax, decreasing the number of smokers would not automatically translate into less health care costs. For one, if an individual dies earlier due to smoking-related illnesses, that individual could have very well avoided huge bills caused by elderly care and living. Also, there is more than one way to contract an illness, or to put it another way, there can be another way to get sick that can just as easily cost as much, if not more, than a smoking-related illness. As such, one cannot definitively determine net health benefits due to a smoking ban in public places.

The negative externality of second-hand smoke: A negative externality is economic parlance for saying that a firm or business makes a decision that creates an impact in which an individual or group of individuals did not [fully] consent to the decision [and its effects] voluntarily. Eliminating or decreasing a negative externality is the most legitimate use of any government intervention because it mitigates a market failure that the market cannot solve. In this case, the negative externality in question is second-hand smoke, which is the primary issue that smoking bans address. Let's face it: second-hand smoke is a real health risk that causes an increased risk of all sorts of diseases.

To what extent does the externality of second-hand smoke actually effect other people? Air and water pollution, for example, affect public goods. Smoking bans, on the other hand, primarily target the private sector. If a consumer does not like the fact that smoking is allowed in a given restaurant or bar, they can go to one where it is not allowed. Considering that 55% of Americans are in favor of a smoking ban, and this number does not even include other people who like smoke-free areas but are not as gung-ho to call for government intervention, I am willing to make an educated guess that most Americans want smoke-free establishments. If a customer is so opposed the fact that smoking is allowed in a given establishment, that customer will switch over to a competing business. So, if the demand for smoke-free establishments is climbing and climbing, then there might not even be a need for smoking bans in the long-run. Why? Businesses will realize that customers do not want to enter a smoke-filled establishment with ashtrays and cigarette butts everywhere. Unless a business wants to cater specifically to smokers, the proprietor will most likely prohibit smoking on the premises because bringing in the larger constituency of non-smokers translates into more profit. Either way, a business owner will either adjust accordingly to customer needs or go out of business.

Customers usually have the luxury of choosing an alternative provider for a given good or service so they can avoid the second-hand smoke. The same cannot be said for an employee, especially when the employer is making these decisions. A lot of the employees affected by the second-hand smoke are in the hospitality and entertainment sectors, and odds are that these jobs do not pay well. In a world with strictly competitive labor markets and no unemployment beyond the natural unemployment rate, I would argue that if the employee didn't like that they worked in a working environment with cigarette smoke, much like the customer, they could go elsewhere and simply find another job. It sounds like nice economic theory. The problem is that we do not live in that kind of world. We live in a world with real unemployment problems that affect people. The less education, experience, and skills one has, the more difficult it is to find a job. Since a great majority of these jobs are low-skilled, it is not that easy to "bounce back" or ask one's boss for a raise to financially compensate the additional risk taken for being exposed to second-hand smoke. The labor markets have labor rigidities, which is to say that it is not that simple to quit a job and find a new job if second-hand smoke is deemed to be that bothersome and detrimental to one's health. To paraphrase the Surgeon General (see Ch. 10), there is a legitimate negative externality on employees with regards to one's health (also see Meyers et al, 2009, which shows that smoking bans mean decreased rate of heart attacks), which is a clear violation of the non-agression axiom.

Conclusion: As can be seen throughout my blogging history, I would normally consider telling a proprietor what to do with their private property to practically be anathema. However, I have to remind myself that I am a consequentialist libertarian who believes in limited government. Aside from being a logical fallacy, I do not want to entertain a rebuttal based on the slippery slope argument because a partial smoking ban does not, in practice, translate to the government intervening in every facet of one's health.

When asking myself whether the government should intervene, I'm certainly not as simple-minded as "Of course the government should intervene! It can solve all of our problems." I first ask myself whether there is an actual market failure. If there is, I ask if there is a market solution to said market failure. If I realize that there is no market solution, I ask if there is a government solution that works. Typically, I find that such a solution does not work in practice. The point to make here is that in this case, a partial smoking ban works. 

I can think of alternative policies that can be implemented to potentially address the same issues. If an establishment decides to have both a smoking and non-smoking section, the government can mandate that there is a high surcharge or tax for sitting in the smoking section. That tax revenue can be collected to somehow compensate those who are exposed to second-hand smoke. The government can also provide an alluring enough of a tax credit to voluntarily ban smoking in an establishment, although where are we going to get the money? I could suggest that there is a licensing scheme in which an establishment would have to pay an exorbitant amount to allow for smoking, but that would be more difficult to regulate. Establishments could put up a sign for second-hand smokers warning them about the dangers of second-hand smoke, but effectiveness would be minimal. These alternatives might somewhat work, and could be used in concert with a partial smoking ban, but it would not be as effective as the partial ban (Hoffman and Nell, 2012). In summation, there are certain situations that merit reasonable, limited regulation, and given the nature of the negative externality, a partial smoking ban is one of those situations.