The economic implications of tobacco product sales in a nontobacco state
K. E. Warner and G. A. Fulton
Department of Public Health Policy and Administration, School of Public Health, University of Michigan, Ann Arbor 48109-2029.
OBJECTIVE--The tobacco industry claims that tobacco makes a significant
economic contribution to each of the states in the United States. We sought
to determine whether Michigan, a nontobacco state, would reap more economic
benefits from the presence or absence of tobacco product sales.
DESIGN--Computer simulation of the Michigan economy, with and without
tobacco product sales, for the years 1992 through 2005. INTERVENTION--We
simulated Michigan's economy with tobacco expenditures eliminated or
reduced and the equivalent spending redistributed to other goods and
services, according to consumers' normal spending patterns. We compare
these results with baseline forecasts of the economy. MAIN OUTCOME
MEASURES--Numbers of jobs and tax revenues. RESULTS--Michigan would have
had 5600 more jobs in 1992 had there been no expenditure on tobacco
products, with equivalent spending redistributed to other goods and
services (and to other taxes, to replace half of lost cigarette excise tax
revenues). By the year 2005, a tobacco-free Michigan would still have
almost 1500 more jobs than it will have if sales trends for tobacco
products continue (ie, gradually declining over time). If, instead of
tobacco expenditures ceasing, the contemporary rate of decline in tobacco
consumption had doubled, the state would have had over 300 more jobs in
1992 and would have nearly 800 more in 2005. With cigarette excise tax
revenues not replaced, the elimination of spending on tobacco products
would have decreased Michigan's tax revenues by $254 million in 1992. The
more realistic doubling of the expected decline in smoking would have
decreased revenues by $14 million that year. CONCLUSIONS--Reducing or
eliminating tobacco product spending in Michigan will increase employment
in the state, as well as health.
