Sunday, 16 December 2012

Smoking bans and adverse selection

We’ve just got back from a couple of days in France. It was a good trip, but one thing is clear - smoking is a problem in France. I have nothing against people smoking if that’s what they choose to do. What I do have an issue with, is myself and my family having to ‘share’ in their smoking. And for a large part of our trip we had no choice but to share. In public spaces - train platforms, Christmas market, cafes etc. - you could argue it is not so disturbing to be constantly engulfed in cigarette smoke. But, when you cannot escape the smoke in your hotel and hotel bedroom then it starts to get a bit annoying.
    Smoking is, of course, banned in public places in France. And, there are lots of signs to remind people of this fact – the hotel was full of no smoking signs. Its just that the French appear to complete ignore the law. Indeed, during our visit a report was published by government auditors (Cours de Comptes) highlighting the seriousness of the problem – 1 in 3 French adults smoke, tobacco is the most common cause of avoidable death, and enforcement of the legislation is very poor. The report was headline news, but will anything change?
    Well, my purpose here is not to question how smoking can be reduced. Instead I want to talk about the danger of legislation that is not enforced. In the U.K. the ban on smoking in public places is enforced relatively well. If a person smokes in a hotel room then there is a significant probability of punishment. I recently heard, for instance, of someone staying in a hotel where the fire alarm went off in the middle of the night because another guest was smoking – the culprit was fined £100 and thrown out of the hotel. Such threats appear to work – smoking in British hotels does not seem a major problem. An enforced ban on smoking suits me, because I don’t have to put up with cigarette smoke. It is probably not so great for smokers. But, as with any negative externality, its impossible to find a solution that pleases everyone. Current legislation favours non-smokers and, as such, protects non-smokers relatively well.
    What’s happening in France is not about favouring one side over another – its a lot worse than that. To see why, think back to the days before any ban on smoking. Then firms had an incentive to offer a service for both smokers and non-smokers. Hotels, for example, had parts of the hotel with rooms for smokers and parts for non-smokers. This also suited me fine because I didn’t have to put up with a room smelling of cigarette smoke. It can also benefit smokers if smoking rooms having slightly lower demand. The only people that lose out are non-smoking employees that need to clean the rooms of smokers.
    Once a ban on smoking is imposed firms cannot discriminate between smokers and non-smokers. That clearly does nothing to help smokers. The main point, however, is that when the ban is not enforced it harms non-smokers: non-smokers have to put up with cigarette smoke because hotels no longer have the power to distinguish smokers from non-smokers. This can even lead to adverse-selection – non-smokers getting so annoyed that they spend less time in hotels. And employees are clearly no better off either if smokers carry on smoking as before. A non enforced ban on smoking, therefore, helps no one and positively harms non-smokers! 
    That’s not very clever. But, there is nothing special about smoking bans - any law that is not enforced has the potential to harm the very people it was designed to protect. And that clearly does nothing to motivate people to change their ways. It is, therefore, no surprise that smoking has increased in France since the smoking ban was put in place over five years ago. Until France starts enforcing the ban expect the proportion of smokers to increase further, not decrease!

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