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close this bookFact sheet No 223: Tobacco - Supporting the Tobacco Industry is Bad Economics - April 1999 (WHO, 1999, 1 p.)
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View the documentTobacco - Supporting the Tobacco Industry is Bad Economics


April 1999

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Tobacco - Supporting the Tobacco Industry is Bad Economics

Tobacco not only kills people, it also saps national treasuries. Just as there are no safe levels of tobacco consumption, there are no safe investments in tobacco. The economic impact of tobacco has been analyzed in many countries in recent years. Studies from Brazil, China, South Africa and Switzerland complement earlier analyses done in Canada, the United Kingdom and the United States. Their combined message is unequivocal – the alleged economic benefits of tobacco are illusory and misleading.

The devil is in the detail. Tobacco has large, direct and intangible costs associated with it – costs that often not taken into account when tobacco’s virtues are extolled. Rarely do those who argue for continuing investment in tobacco take account of the real economic effect of declines in the tobacco industry. Most serious analyses of all the economic effects show that a decline in the tobacco industry would not result in less employment. In fact, as employment in the tobacco sector decreases, overall employment may stay the same or even increase. Simply put, as one section of the economy declines, others open up. A recent study (R. van der Merwe, The Economics of Tobacco Control in South Africa, 1998) concluded:

“The results presented indicate unequivocally that a cessation of cigarette purchasing would lead to significant net increases in South African output and employment.”

A World Bank study entitled “The Economic Costs and Benefits of Investing in Tobacco” (March 1993) has estimated that the use of tobacco results in a global net loss of US$200 billion per year, with half of these losses occurring in the developing world. This cost does not reflect loss due to reduced quality of life of smokers and their families. The same study also estimated that smoking prevention is among the most cost-effective of all health interventions.

In a developing country with a per capita gross domestic product of US$ 2000, effective smoking prevention costs approximately US$20 to US$40 per year of life gained.

On the other hand, lung cancer treatment, which can prolong the lives of only about 10% of affected people, would cost US$ 18 000 per year of life gained.