RESEARCH PROJECT

School of Law, Mahindra University

TOPIC: “The influence of a smoking ban on the economy”

As a part of the Internal assessment

For the Academic Year 2023-2024

Prepared & submitted by

M. keerthi (SL22ULBA021)

Submitted to Professor Dr Amit Kumar Jha

School of Law, Mahindra University

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 ACKNOWLEDGEMENT

First of all, I would like to thank, Prof. (Dr.) V. BALAKISTA REDDY Dean of the School of
Law at Mahindra University, for initiating the internal assessment as a credit course, which has
provided me with an incredible opportunity to work and learn.

I would like to convey a sincere thanks to Prof. DR AMIT KUMAR JHA for His assistance in
choosing the topic and for sharing his thoughts on it.

I sincerely appreciate the opportunity of the School of Law, Mahindra University which has
provided us with helping every one of their students reach their full potential. My research paper
served as a source of ideas, a means of raising awareness, a means for sharing impact, validation,
and career progress, and an avenue for field contribution.

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 TABLE OF CONTENT

Sl SUBJECT PAGE NUMBER

no
1 COVER PAGE 1

2 ACKNOWLEDGEMENT 2

3 TABLE OF CONTENT 3

4 INTRODUCTION 4

5 STATEMENT OF PROBLEM 4

6 RESEARCH OBJECTIVE 4

7 RESEARCH QUESTIONS 4

8 HYPOTHESIS 5

9 RESEARCH METHODOLOGY 5

10 TENTATIVE CHARACTERIZATION 5

11 INTRODUCTION 6

12 THE ECONOMICS OF SMOKING 7-8

13 THE IMPACT OF SMOKING BANS ON 9

BUSINESSES

14 THE IMPACT OF SMOKING BANS ON THE 10

WORKFORCE

15 CONCLUSION 11

16 BIBLIOGRAPHY 12

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INTRODUCTION

Smoking bans are becoming more common around the world, due to growing concerns about the
negative consequences of smoking on public health. While these bans have been praised for their
positive influence on smoking rates and secondhand smoke exposure, their economic
implications have caused considerable controversy. The purpose of this study is to delve into the
complicated interplay between smoking prohibitions and the economy, examining the
multifaceted effects on many sector . As countries adopt stricter restrictions to reduce smoking in
public places, the economic consequences become an important subject of study.

STATEMENT OF PROBLEM

Smoking bans have had a wide range of economic impacts, raising concerns about the ability to
affect businesses, impact government revenue, and change employment patterns. Understanding
these economic consequences is critical for policymakers to make educated judgments about
smoking control efforts.

RESEARCH OBJECTIVE

 To assess the economic impact of smoking bans on various sectors such as hospitality,
healthcare, and government revenue.

 To assess the social and public health consequences of smoking bans, such as their
impact on smoking rates, secondhand smoke exposure, and overall health outcomes.

RESEARCH QUESTIONS

 Whether smoking restrictions result in a significant drop in revenue for tobacco industry
firms

 What is the impact of smoking bans on the revenue and profitability of bars, restaurants,
and other hospitality businesses?

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HYPOTHESIS

Smoking bans have been a commonly used public health policy aimed at reducing the use of
cigarettes However, the economic impact of smoking restrictions is still being debated. Some
studies imply that smoking prohibitions have a negative financial effect on firms, particularly in
the hotel and restaurant industry, according to research on the subject. Others argue that smoking
restrictions may have a favorable economic impact by increasing productivity and lowering
healthcare expenditures.

RESEARCH METHODOLOGY

This study takes a mixed-methods approach, promoting statistical data analysis of economic data
with descriptive judgments based on interviews and case studies. The purpose is to provide a
thorough picture of how smoking prohibitions affect the economy as a whole.

TENTATIVE CHAPTERIZATION

Chapter: 1 INTRODUCTION

Chapter: 2 THE ECONOMICS OF SMOKING

Chapter : 3 THE IMPACT OF SMOKING BANS ON BUSINESSES

Chapter: 4 THE IMPACT OF SMOKING BANS ON the WORKFORCE

Chapter: 5 CONCLUSION

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 INTRODUCTION

Smoking bans have been introduced around the world, the main aim of which is to improve
public health by reducing passive smoking and smoking-related diseases. The health benefits are
indisputable, but there is disagreement about how these bans affect the economy. Healthcare
costs are one major area of influence. Smoking-related diseases can be reduced if smoking
restrictions help reduce smoking. In the long run, this can lead to lower medical bills, reducing
the burden on healthcare systems. A healthier society usually means less need for drugs and
medical services for diseases caused by smoking. On the other hand, the tobacco industry has a
direct impact. As a result of the bans, the number of smokers decreased, which reduced the
demand for tobacco products. This could lead to job losses in the industry and reduced sales for
tobacco manufacturing and distribution companies. Tax revenue from tobacco sales may
decrease, which may affect the state budget and require compensatory measures. The
introduction of smoking restrictions, especially in restaurants and bars, is causing upheaval in the
restaurant industry. Some businesses benefit from the bans to attract non-smokers who
appreciate a smoke-free facility, while others may experience fewer customers choosing smoking
areas. Companies in the hotel industry can see both positive and negative financial effects from
changing consumer behavior. In addition, bans can encourage the development of substitute
industries. Companies that meet the demands of companies looking for alternatives to traditional
tobacco products can grow as smoking declines. This could include the development of programs
to help people quit smoking or the growth of the vaping industry, both of which support
economic diversification. Another environment where the smoking ban is enforced is the
workplace. The ban on indoor smoking by many companies has a beneficial effect on the
productivity and health of employees. Reducing smoke breaks and improving overall health can
increase employee productivity, which can benefit organizations financially. But it's also
important to consider the upfront costs of implementing smoke-free regulations. No smoking
impact on the economy includes both positive and negative aspects. Given the obvious health
benefits and long-term economic benefits of reducing smoking-related diseases, it is important to
recognize the tobacco industry's immediate difficulties and potential for reduced tax revenues.
Achieving a balance between public health goals and minimizing economic consequences is
essential for successful policy in this area. In 2004, India's entire national healthcare expenditure
was $25 billion. In comparison, research from other developing nations, such as China and
Vietnam, indicated that smoking had a direct cost of 3.1% and 4.3% of national healthcare
expenditure, respectively. Tuberculosis is a major public health concern in India, with around 1.8
million new cases reported each year, and our findings underline the critical impact of tobacco
use on this disease. In reality, TB is responsible for $311 million (18%) of the entire economic
cost of tobacco use in India, including $193 million (16%) of the direct cost and $118 million
(24%). This is more than three times the $100 million spent in India on tuberculosis control.

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 THE ECONOMICS OF SMOKING

In India, the direct medical costs of treating tobacco-related diseases were $285 million for
smokeless tobacco and $907 million for smoked tobacco. The value of lost productivity and
nursing costs due to illness is included in the indirect morbidity costs of tobacco use, which were
$398 million for smoked tobacco and $10 million for smokeless tobacco. The economic toll
caused by tobacco was $1.7 billion. Tuberculosis accounted for 18 percent ($311 million) of
tobacco-related costs in India. 88% of the total price of tobacco was accounted for by men. The
cost of tobacco consumption was approximately 16% higher than the total tax collected on
tobacco and several times higher than the expenditure of the Government of India and tobacco
control. The cost of tobacco-related tuberculosis was three times the amount spent on
tuberculosis control in India. The costs associated with premature mortality from smoking are
not included in the economic costs estimated here; in many countries, these costs are estimated to
account for 50 to 80 percent of the total costs of tobacco use. There is no comprehensive national
study that has calculated the economic costs of tobacco use in India. However, a report to the
Indian government cited a study by Rathi and Chaudhry 1that calculated the costs of three major
tobacco-related diseases in India: chronic obstructive pulmonary disease, cancer, and coronary
artery disease. From 1990 to 1992, or until death or recovery, they collected data on treatment
costs (medical and other), facility costs, and lost income during the care of samples from two
Indian sites: 195 patients in Delhi and 500 patients in Delhi. in Chandigarh. They calculated the
total direct and indirect costs of India's top three tobacco-related diseases in 1999 at Rs. 277.61
($6.2) billion using the CPI, with 83.7% of the cost attributable to premature mortality. Reddy
and Gupta (12) reviewed these costs for 2002–2003 and calculated that the three tobacco-related
diseases cost a total of Rs. 308.33 ($6.6) billion. Many countries have calculated the economic
costs of tobacco. Although India is the second largest consumer of tobacco in the world, so far no
comprehensive national study has been conducted to calculate the economic costs of tobacco in
the country. This study calculates the economic costs of tobacco without the costs of premature
mortality in India it was 1.7 billion USD in 200. 87% of this was due to men and 13% to women;
smoking tobacco accounted for 77% of this and smokeless tobacco 23%. The economic costs of
tobacco use today are far greater than the money received from tobacco taxes. Furthermore, there
is evidence that tobacco taxes in India are significantly below ideal levels. 2Therefore, a tax
increase in tobacco taxes could be justified. revenues to finance tobacco-related health costs for
1
G.K. Rath, Estimation of Cost of Tobacco-related Cancers, ICMR task force study, 1990-1996
https://ntcp.mohfw.gov.in/assets/document/surveys-reports-publications/Estimation-of-Cost-of-Tobacco-Related-
Cancers-Report of-an-ICMR-Task-Force-Study.pdf

2
Chaloupka, F.J. et al. (2002) ‘Tax, price and cigarette smoking: Evidence from the tobacco documents and
implications for tobacco company marketing strategies’, Tobacco Control, 11(Supplement 1),

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the underprivileged and fund initiatives to prevent and reduce costs of tobacco-related diseases.
Because higher taxes can reduce tobacco use, raising tobacco taxes can also reduce tobacco
costs. Economic losses caused by the tobacco industry Tobacco has a large direct and indirect
cost on society because of the morbidity and mortality linked with tobacco use. According to the
Indian Council of Medical Research, the overall losses from tobacco-related disorders in 1999
were approximately Rs 277.6 billion, or US $6.5 billion. Cancer was estimated to cost Rs
350,000, coronary artery disease was estimated to cost Rs 29,000, and chronic obstructive
pulmonary disease was estimated to cost more than Rs 23,000.[34] According to Reddy and
Gupta, the total cost of the three primary tobacco-related diseases in 2002-03 was Rs 308.33
($6.6) billion.[8] John and Co. The entire economic cost of tobacco usage in India in 2004 was
estimated to be $1.7 billion, 16% higher than the total excise tax revenues collected from all
tobacco products in fiscal year 2003-04 ($1.46 billion). The direct medical costs of treating
tobacco-related disorders were $907 million for smoked tobacco and $285 million for smokeless
tobacco. They also assessed the indirect morbidity costs of tobacco smoking, which included
caregiver costs and the value of lost work time owing to illness. This amounted to $398 million
in tobacco sales and $104 million in smokeless tobacco sales. Tuberculosis accounted for 18% of
tobacco-related expenses in India ($311 million).
Economics is based on personal preferences. People who smoke tobacco recognize that their use
gives them useful benefits. or satisfaction. This result is unaffected by the harmful nature of
many activities, such as skydiving, driving, or smoking, because each customer and market
demand takes these non-price costs into account. Economic theory shows that free markets are
efficient under certain assumptions - that is, they lead to the best allocation of resources for
society. Nobel prize-winning economist Gary Becker is primarily responsible for his "rational
addiction" which elevated dependent behavior to the status of reasoned decision-making.
Dependent goods are those whose value depends on previous use; the more you use them, the
more you're likely to appreciate them. Examples of such goods are music, television, drugs,
alcohol, and religion. People become addicted to substances because they believe the benefit
justifies the harm in their situation, even if it comes with withdrawal symptoms. One way to test
rational addiction theory is to test whether addicts consider their current need for an addictive
product in a future price—as a rational person would because they might become addicted to
paying higher prices in the future. Smokers have been found to react more strongly to continuous
prices. Anti-smoking regulation is not just a theoretical debate. In most Western countries,
smoking is prohibited or regulated by law on private property - not yet in public and private
homes, but in many private places open to the public, such as restaurants, shopping centers, or
workplaces. The law - and eventually enforced by gunmen - not only prohibits businesses from
combining smoking with non-smoking accommodation but also from offering smoking-only
restaurants or flights.

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 THE IMPACT OF SMOKING BANS ON BUSINESSES

Tobacco is addictive and harmful. The overwhelming body of evidence showing the harmful
effects of tobacco use supports the call for more effective and direct policy intervention to ban
the sale of all tobacco products. This is particularly important for developing countries that have
lagged in their tobacco control efforts and for developing countries that do not have sufficient
public health infrastructure or financial resources to carry out extensive campaigns against
aggressive marketing and promotion of the tobacco industry and tobacco products. This article
has made important arguments to support and enforce such a ban, citing China as an example and
arguing that it is a viable political intervention on the global stage. We hope that information
from this perspective will stimulate urgent policy changes to reduce tobacco use worldwide.
Externalities are a generally accepted basis for government intervention in the market. Some
people benefited from smoking restrictions because of the smoke used in bars and restaurants
and the health effects of smoking. On the other hand, these bans also had an unexpected effect on
alcohol consumption and drunk driving. The increase in alcohol consumption in bars and
restaurants due to a smoking ban is on average about one drink per month (depending on
drinking), or % more. Externalities are a generally accepted reason for governments to intervene
in markets. In the case of cigarettes, secondhand smoke has well-documented negative health
effects. Smoking bans in bars and restaurants have made some people more aware of the health
effects of smoking and secondhand smoke. However, these bans have led to unintended
consequences for drinking and driving under the influence. The ban on smoking in bars and
restaurants increases alcohol consumption on average by about 1 drink per month (provided
drinking is provided), or %. Since smoking bans do not seem to reduce alcohol consumption in
bars and restaurants, the question arises: Why have more bars and restaurants not readily adopted
smoking bans? At first, many bar owners did not believe that the smoking ban would benefit
their business (Milwaukee Record, 2015). The optimal economic conclusion might be for all bars
to be smoke-free, but if one bar suffered, they would buy all the smokers and #039; business The
results of this study suggest that a policy intervention in one risky health behavior can have a
spillover effect on another risky health behavior if it replaces or complements the risky health
behavior.

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 THE IMPACT OF SMOKING BANS ON THE WORKFORCE

The effects of smoking bans on employment rates, wages, and worker productivity have been
studied in various countries. While there may be concerns about potential negative impacts on
the hospitality and tourism industry, studies show that smoke-free workplace legislation
generally has a neutral or positive economic impact. Studies have shown that smoke-free
workplaces are associated with improved productivity, as absenteeism is reduced and smoke
breaks are eliminated. This can lead to savings for employers in the form of reduced healthcare
costs and increased employee efficiency. In terms of wages, there is little research that
specifically addresses the effects of smoking bans. However, the overall economic benefits of
smoke-free workplaces, such as worker health and lower healthcare costs, may indirectly
contribute to higher wages for workers. Smoke-free workplace legislation has been associated
with several health benefits. They include Reduced Exposure to Secondhand Smoke (SHS):
Smoke-free workplace laws significantly reduce exposure to SHS for both the public and the
workforce. The reduction in exposure is associated with improved respiratory health, especially
in occupational groups previously heavily exposed to SHS, such as workers in bars, restaurants,
and casinos. Reduced risk of smoking-related diseases: SHS contributes to several diseases such
as lung and other cancers, and respiratory diseases such as asthma and heart disease. By reducing
exposure to SHS, smoke-free workplace legislation can potentially reduce the incidence of these
smoke-related diseases. Fewer hospitalizations: The smoking ban led to fewer hospitalizations
for myocardial infarction (heart attack). This shows that smoke-free workplace legislation can
have a positive impact on cardiovascular health. Better reproductive outcomes: exposure to SHS
impairs reproductive health, including low birth weight. By reducing exposure to SHS, smoke-
free workplace legislation can promote better reproductive outcomes. In terms of smoking rates,
smoking bans combined with other tobacco control measures such as tax increases and smoking
cessation subsidies have reduced the number of cigarettes smoked and potentially reduced
smoking rates. In terms of economic effects, some studies have evaluated the impact of smoke-
free policies on the restaurant industry. These studies compared various indicators such as bar
and restaurant sales tax revenue, employment figures, number of licensed businesses, and hotel
revenue before and after smoke-free laws went into effect. Results generally showed neutral or
positive economic effects, such as reduced building maintenance costs, reduced risk of smoking-
related illness, and potential savings from reduced healthcare provider visits and hospitalizations.
It is important to note that these health benefits are supported by consistent results across
different populations and studies. However, long-term effects, such as effects on lung cancer
incidence, may be difficult to determine due to confounding factors. Monitoring the prevalence
of smoking, young people starting to smoke, and general attitudes towards tobacco are also
central to assessing the effectiveness of smoke-free workplace legislation. Making all workplaces

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smoke-free would reduce smoking by 10 percent. Workplace bans have the greatest impact on
groups with the highest smoking rates.

CONCLUSION:

Smoke-free policies impact on businesses in many ways, from improving employee health and
productivity to reducing insurance, cleaning, maintenance, and potential litigation costs. The
economic impact of smoking bans is multifaceted, affecting health costs and tobacco use.
industry and various economic sectors. Smoking restrictions can reduce healthcare costs in the
long term by reducing smoking-related diseases, which ultimately ease the burden on healthcare
systems. However, it is necessary to recognize the immediate challenges faced by the tobacco
industry, including potential job losses and reduced tax revenues. In addition, the restaurant
industry may experience both positive and negative effects due to changing consumer behavior
due to the smoking ban. As a college student understanding the complex interplay of public
health goals and economic consequences is critical to informed decision-making and effective
policy implementation in this area. The economic impact of the smoking ban is an issue that has
significant implications for public health and economic well-being. Regardless of the potential
economic impact, the long-term health and social benefits of implementing a smoking ban far
outweigh the short-term costs. In addition, externalities related to tobacco use and passive
smoking emphasize the need for national measures to protect public health. The broader impact
of tobacco regulation and supportive policies that prioritize public health and well-being.
Through comprehensive policies to address the economic and health costs of tobacco use, we can
work to create a healthier and more sustainable society for future generations. The smoking
ban does not financially harmful impact on business restaurants, bars, or establishments
that serve tourists with many surveys finding a small positive effect on these practices. These
studies include e.g. results as official reports on sales, employment, and volume there is little
research on the effects of the no-smoking policy in games institutions and their results are mixed;
more research is needed in these places. There is not enough evidence about the impact of the
smoke-free policy on various problem behaviors like other substance use and its consequences,
problem gambling, domestic violence, noise, and garbage There is no reliable evidence to
support claims that smoke-free politics has a negative impact general economy the
implementation of smoke-free workplace legislation has shown a positive impact on both the
economy and public health. Research results consistently show that smoke-free workplaces
increase productivity, reduce healthcare costs, and improve employee performance, contributing
to potential savings for employers. In addition, the health benefits associated with reduced
smoking-related diseases, reduced risk of smoking-related diseases, and improved reproductive
performance further emphasize the importance of smoking bans in creating a healthier work
environment. Despite concerns about a potential negative impact on the hospitality and tourism
industries, studies have generally shown neutral or positive economic impacts, emphasizing the
overall benefits of smoke-free workplace legislation. The long-term effectiveness of these

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policies requires ongoing monitoring of smoking prevalence, youth rates, and attitudes toward
tobacco use, which underscores the continued need for comprehensive tobacco control efforts.

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