Killing Oneself on the Cheap : Smoking increases as Americans shift to discount brands
Philip Morris Cos., a giant in the $44-billion U.S. tobacco market, says it is cutting the price of its best-selling Marlboro cigarettes by as much as 20% and will hold the line on price increases for its other key brands. The decision comes as sales of major cigarette labels continue generally to fall. In the first quarter of this year, most notably, Marlboro shipments fell by 8%, following a 5.6% drop last year. All this would seem to be good news in the light of government estimates that smoking-related illnesses take hundreds of thousands of lives and cost the nation $65 billion annually. The news, though, is decidedly not good.
In 1991, reports the Centers for Disease Control and Prevention in Atlanta, the rate of cigarette smoking rose for the first time in a quarter-century.
Largely accounting for the rise is an accelerating price-driven switch by smokers to discount brands, many made by the major tobacco companies. Cheaper cigarettes--some sell for one-fourth or so the price of major brands-- now command more than 30% of the domestic market.
The U.S. surgeon general’s office has estimated that every 10% rise in cigarette prices leads to a 4% drop in consumption. Tobacco companies have regularly raised prices and higher state and federal taxes have pushed the costs of smoking up even more, contributing to a healthy decline in consumption. That trend now stands in danger of being halted and even reversed. Cheaper cigarettes are less profitable for the tobacco companies, but by undercutting the economic incentive not to smoke they help keep the smoking population disturbingly large.
Price cuts on cigarettes, like earlier price increases, represent a straightforward business decision aimed at boosting profits on a legal product. In response to these cuts and to the burgeoning sales of cheaper cigarettes, we urge state and federal governments to move no less straightforwardly to protect public health by raising cigarette taxes to discourage smoking. Smoking kills. In the long term, making this drug addiction unaffordable can only be a public blessing.
