Law of Diminishing Returns – Tobacco Legislation

Few points in the debate have merit. First, obviously the fact that “the phenomenon of diminishing returns to government intervention” is in place. Secondly, the figures show that the highest output was between 1985 and 1995 and then it started to decline. One of the reasons of the decline is that the smokers “who were the most easily persuaded have already quit.”

I agree with the author statement that too much information may kill information. If the information is redundant it can be easily ignored. It can be demonstrated by the fact that the new legislation that forced manufactures to print pictures demonstrating effects of smoking didn’t get the expected output.

Some points lessen the debate. The author refers to studies of American economist Kip Viscusi. He states that smokers “overestimate the risks of smoking as evaluated by the public health literature.” I strongly disagree and I think that smoking risks cannot be overestimated as smoking is addictive as well. Most likely they are underestimated; otherwise a lot more people would quit smoking.

The point of diminishing returned for government was approximately in 1995. The number of people quit smoking was the highest by that moment. After this point the return began to decline regardless higher prices.

There should be new solutions or actions taken to lessen the diminishing effect. I think the government to target the younger people first. For those who smoked couple of years or may be few months would be much easier to quit. One of the ways – to raise the minimum age of those allowed smoking. In Canada the legal smoking age is 18-19 years old depending on the province.  If government makes it 21 years old there will be less youngsters starting to smoke.

The article confirms the fact that tobacco is a very inelastic product. Regardless the higher prices the demand remains stable. Moreover, the consumers try to circumvent taxes and regulation by turning to a smuggled consumption.

As higher taxation can be applied to tobacco as a sin product the article debates on feasibility of higher taxation for cigarettes to lessen the Diminishing effect. Higher taxes bring more criminal into play if it concerns addictive products.