Economist visits Syracuse, critiques tobacco settlements
(U-WIRE) SYRACUSE, N.Y. -- The price of tobacco on the health of the country far outweighs the added economic benefits found in the cost of cigarettes, said Joseph Newhouse in a Thursday afternoon lecture at Syracuse University.
Newhouse, an expert witness in a Massachusetts trial between the state and cigarette companies such as R.J. Reynolds Tobacco Holdings, Inc., joined policy researchers in Eggers Hall to discuss the role of tobacco in the United States.
"Tobacco has external costs and benefits," said Newhouse, a Harvard University professor. "Juries have been unwilling to have corporations completely assume the liability for people's health. They think the responsibility should fall on the individual."
Major tobacco companies, such as R.J. Reynolds and Philip Morris, have settled lawsuits in 46 states during the last two years, with taxpayers ultimately footing the bill, Newhouse said. In the first four state trials, the companies paid up to $15.3 billion, he added.
"This was the largest award in the history of American litigation," Newhouse said.
The economic influence the tobacco companies present to the country involve the massive cost of the recent trials, said Newhouse, who has no relation to Syracuse University's Newhouse School of Public Communications.
The settlements have not only caused the industry to increase its cigarette prices, but forced states to spend substantial taxpayer funds to fund the litigation. The average state is expected to pay a total of about $500 million per year for 25 years for trial lawyers in the case.
Harvard University professor W. Kip Viscusi visited SU in September expressing an opposing view. Viscusi said that big tobacco companies are beneficial to the country's economy and their influence should be appreciated by non-smokers.
Because smokers die sooner, the Social Security and Medicare tax burdens are reduced on those still living, he said. This fact helps the economy by leaving people with more disposable income, he explained.
Students said they thought the recent suits against the corporations were a waste of taxpayer money with few long-term financial effects for the industry, which earns billions of dollars in revenue each year.
"I think the companies should not be prosecuted," said Katy Gavagan, a freshman political science major. "People are choosing to buy cigarettes. It's not like you're forcing them to pay. Why would they want to shutdown an industry that employs so many people?"
The lawsuits began when tobacco companies were found to be using advertising tactics that critics say were explicitly aimed at teenagers, Newhouse said. Even though it is illegal to sell cigarettes to minors, most young people are addicted before age 20, he added.
Youth smoking many times leads to a lifelong addiction, he added.
"Adolescents don't intend to become addicted and overestimate their ability to quit," Newhouse said. "The smoker cares more about the enjoyment smoking gives them than the health costs."
Despite the large penalties, students remain skeptical about whether the monetary penalties will be effective in deterring the companies from marketing to minors.
"I doubt if the cigarette companies are going to listen," said Nehir Sonmez, a sophomore computer engineering major. "The state is also earning a lot of money through the tax revenue of cigarettes."
Sonmez added that the choice to smoke is a personal one and not the liability of the tobacco industry.
"Individuals should be responsible," he said. "People already aren't allowed to smoke in public places, so it shouldn't affect other non-smokers."
(C) 2000 Daily Orange via U-WIRE