NCPA - National Center for Policy Analysis

Would a Free Market Lead to Fewer Smokers?

September 23, 2013

Recent developments in the fragmented nicotine industry show that private enterprise can correct market failure long before government failure is even acknowledged, let alone rectified. The interests of consumers are better advanced by the provision of accurate information and free choice than by prohibitions and restrictions on commercial speech, says Christopher Snowdon, director of lifestyle economics at the Institute of Economic Affairs.

The public health movement is divided between those who support the "neo-prohibitionist" approach and those who support "harm reduction."

  • One consequence of the neo-prohibitionist approach is that innovative products are banned under the precautionary principle. The sale of the two least hazardous recreational nicotine products -- e-cigarettes and Swedish snus -- are banned in many countries despite growing evidence that they can play an important role in reducing the smoking rate.
  • The main beneficiaries of the neo-prohibitionist approach are the incumbent cigarette industry and the pharmaceutical industry.
  • Opponents of harm reduction claim that safer nicotine products act as a gateway to smoking and deter smokers from quitting. However, most evidence suggests that nicotine products have little appeal to nonsmokers and are overwhelmingly used as a gateway from smoking.
  • Arguments made against tobacco harm reduction on health grounds are not compelling. Opposition to e-cigarettes and snus can only be properly understood in the context of longstanding moral objections and anti-industry sentiment.

Countries that follow the model of smoking bans, high tobacco taxes and graphic warnings do not have lower smoking rates than other countries. Evidence from Sweden strongly suggests that the harm reduction approach has more to offer than the neo-prohibitionist model.

Smokers should not be discouraged or forbidden from switching to vastly less hazardous forms of nicotine use. Unless alternative nicotine products pose significant risks to health, or act as a gateway to smoking, there is no justification for them being heavily regulated or banned.

If health is the goal, governments should step back and allow free market solutions to gain popularity. In practice, this means taxing and regulating e-cigarettes as ordinary consumer products and allowing snus to be sold with appropriate and accurate labeling to inform customers of its risk profile relative to cigarettes.

Source: Christopher Snowdon, "Free Market Solutions in Health," Institute of Economic Affairs, July 2013.


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