The impact of a decline in cigarette smoking on the cigarette industry.

Abstract

s a newcomer to the great debate over A cigarette smoking and health, it seems prudent at the outset to explicitly state one or two caveats. My remarks are addressed to the impact on the cigarette industry of a significant decline in cigarette smoking-a decline which takes place over a fiveto ten-year period. The assumption that a decline in cigarette smoking will take place is a stipulation given to the panel as a ground rule, and what I shall say should not be taken to imply that I believe such a decline is likely. My second caveat is directed to the distinction between positive statements about what will happen, and ethical or normative judgments about whether those events are more or less desirable or undesirable. In particular, I should not like statements to the effect that industry could readily adjust to a decline in cigarette consumption to be interpreted as a rationale for government action designed to bring about such a decline. In the language of economics, the panel has been asked to discuss the consequences of a decline in the demandl for cigarettes. Such declines in demand are fairly common phenomena. They occur for a number of reasons, including changes in consumer tastes, changes in the price of substitute or complementary commodities, and the introduction of new products. The invention of refrigerators dramatically reduced the demand for ice. The development of airplanes, trucks, and buses has significantly lowered the demand for rail services. The development of synthetic fabrics has reduced the demand for wool and cotton. The demand for coal has declined steadily as oil and natural gas have come to be substituted in its stead. And the world goes on without these. When shifts in demand occur, the owners of resources in the industry where demand has declined are adversely affected. On the other hand, downward shifts in the demand for one product are usually accompanied by increases in the demand for others, and the owners of the resources in those industries which experience an increase in demand usually are favorably affected. Whether on balance one views a particular shift as desirable or undesirable is a pure value judgment. With that background on the general problem, let me now turn to the cigarette industry specifically.