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Smoking and its Economic Impacts

It is evident that passive, as well as active smoking damage the health of people, as well have related economic costs. Cigarette smoking causes many diseases, cause health inequalities as well as the premature deaths. The number of people dying from the smoking-related diseases increases every year. Shortly the deaths can increase at the rate of 7 percent each day. The population affected by smoking, shortly, can increase to 7 million. From the research conducted by the health, organizations portray that smoking results in approximately 80 percent people dying from lung cancer, emphysema as well as bronchitis, and causes 17 present of the people dying as a result of heart diseases (Chaloupka & Warner, 2000). Smoking accounts for more than a quarter of cancer deaths in the world. These cancers include lip, lung, mouth, pancreases, kidney throat, bladder, cervix, liver as well as stomach cancer. Research shows as well the 600,000 deaths in the world result from passive smoking. Children and women are the main victims of this passive smoking (Chaloupka & Warner, 2000). In research, the Disease Control and Prevention center show that over 440,000 deaths are premature deaths as a result of smoking. However, the smoking industry is one of the taxpaying industry that affects the economy of the country greatly. In this paper, I will discuss, the economic impacts of smoking.

The cost related to the healthcare of the illness caused by tobacco smoking is extremely high. In America the total annual private as well as public healthcare expenses resulting from smoking totals to about 170 billion US dollars. When relating to the total Gross Domestic Product, the smoking cost is roughly one percent of the overall GDP. Various studies have shown the health-associated costs (Windsor et al., 1993). The costs comprise of the medical expenditure in administration and on drugs, cost from passive smoking, children smoking, maternal smoking as well as the smoking-attributable mortality and morbidity. The tobacco abuse cost is also included. For example, the United States of America over 39.6 billion dollars from the federal government as healthcare expenditure for smoking-related diseases. At the same time, every state contributes to this smoking-related illness more money. For example, in 1999, the state of California used US$8.6 billion as the cost of the smoking-related illness healthcare expense (Windsor et al., 1993). Therefore, this costs indicates that smoking is costly in numerous aspects and requires a lot of public finances. In many countries, a large amount of money is used in smoking-attributable in overall healthcare costs.

A part of healthcare smoking costs, many other costs are imposed on the society. Premature deaths as well as well as the smoking-related illness cause a great impact on the economy as a result of premature death as well as the sick workers (Lightwood & Glantz, 1997). Tobacco use is high in most densely populated areas. Most workers are addict and smoke even during working time. Similarly, absenteeism of workers on their workplaces results in decreased productivity. Workers may miss attending to their daily duties because they have to visit the hospital for medication. At the same time, employers have to recruit new staff more often as a result of premature death. This new recruitment adds new costs to the employee affecting the economy of the country. Fire outbreak is another effect of smoking that affects the economy. For example, in 2000 approximately 300,000 or 11 percent of the total fire deaths universally resulted from smoking. This fire causes a lot of damage, starting from the treatment costs of the victims as well as property damage replacement (Warner, Smith, Smith, & Fries, 1996). Approximately 552 US dollar are used every year to cope this damage. Other costs include costs for emergency ambulance and paramedical services, accidents and forest fire caused by the smoking cigarettes.

However, smoking has economic benefits as well. The tobacco industry provides a great benefit deal, especially to consumers, producers, and the economy (Hu, Mao, Shi, & Chen, 2010). The tobacco industry gives job opportunities to people. For example, the tobacco farms employ approximately 33 million individuals worldwide. A huge number of workers depend on tobacco for their daily income. At the same time, tobacco provides the government with tax (Hu et al., 2010). In 2009, the American president, Barrack Obama, signed a law act that increased the American federal tax on tobacco and cigarette to US$1.01 from the initial cost of 36 cents. This increased tax was estimated to result in United States of America income in the federal government. Therefore, tobacco profits the economy of the country.

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Besides the tax income increase and job opportunities, smoking has other benefits to the economy. The premature deaths save the government from paying pension (Chaloupka & Warner, 2000). Short life reduces pension of an individual, therefore the premature death of employee aid the government from paying this pension.

In conclusion, smoking has both the negative and positive impacts on the economy of a country. The negative effects include the effects of smoking on human health. Whereby smoking causes many diseases such as lung, throat, kidney, liver, mouth cancer as well as premature deaths. These diseases and premature death decrease the economy of a country. A great amount of public finance is needed in funding healthcare costs related to smoking. At the same time, a lot of money is needed in compensating fire that results from smoking (Lightwood & Glantz, 1997). Smoking is a common cause of the fire in the world. Fire accidents resulting from smoking requires more money regarding compensation. However, smoking has benefits as well. The tobacco industry provides job opportunities to workers. At the same time, these industries provide tax income to the government that aid in increasing the overall economy. Although smoking contributes to the economy of a country, the health hazards It poses are many to the people both the smoking and passive smokers, therefore, affecting the country’s economy.


Chaloupka, F. J., & Warner, K. E. (2000). The economics of smoking. Handbook of Health Economics, 1, 1539–1627.

Hu, T., Mao, Z., Shi, J., & Chen, W. (2010). The role of taxation in tobacco control and its potential economic impact in China. Tobacco Control, 19(1), 58–64.

Lightwood, J. M., & Glantz, S. A. (1997). Short-term economic and health benefits of smoking cessation: myocardial infarction and stroke. Circulation, 96(4), 1089–1096.

Warner, K. E., Smith, R. J., Smith, D. G., & Fries, B. E. (1996). Health and economic implications of a work-site smoking-cessation program: a simulation analysis. Journal of Occupational and Environmental Medicine, 38(10), 981–992.

Windsor, R. A., Lowe, J. B., Perkins, L. L., Smith-Yoder, D., Artz, L., Crawford, M., … Boyd Jr, N. R. (1993). Health education for pregnant smokers: its behavioral impact and cost benefit. American Journal of Public Health, 83(2), 201–206.



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