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The economics of tobacco: myths and realities
  1. Kenneth E Warner
  1. Department of Health Management and Policy, School of Public Health, University of Michigan, Ann Arbor, Michigan, USA
  1. Dr Kenneth Warner, Department of Health Management and Policy, School of Public Health, University of Michigan, 109 S Observatory, Ann Arbor MI 48109-2029, USA;kwarner{at}

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Each side in the debate about tobacco control—the tobacco industry and the public health community—wields a seemingly powerful set of economic arguments, the industry claiming that economic considerations urge a “go slow” approach to tobacco control, the public health community insisting they recommend an aggressive stance. Each of the most prominent arguments presented by both sides has a kernel of truth to it; yet each, in its own way, represents only a half truth. The industry uses its economic appeal with full knowledge of and intent to exploit its ability to deceive and mislead policy makers and the public. In contrast, tobacco control advocates frequently employ their economic rationale without full appreciation of its limitations. To inform both tobacco control advocates and policy makers more fully, this paper identifies the principal economic myths concerning tobacco and discusses their realities. The myths are associated with their purveyors by initials: TI for Tobacco Industry myths, and TC for myths perpetuated by the Tobacco Control community.

Myth 1 (TI)

Regardless of its health consequences, tobacco is crucial to a nation's (or region's) economy. Without the cultivation of tobacco, manufacture of tobacco products, and distribution and sale of products, a country's economy will suffer devastating economic consequences. Jobs will be lost, incomes will fall, tax revenues will plummet, and trade surpluses will veer dangerously in the direction of deficits.


This is the tobacco industry's favourite economic myth. Conveyed to legislators and cabinet ministers (and journalists), its intent is to encourage the development of an indigenous tobacco industry within a given country, or to discourage the adoption of tobacco control policies likely to decrease tobacco product consumption.

The half truth in this myth resides in the fact that tobacco farming and product manufacture, distribution, and sale do constitute significant economic activities in many economies, and in the world as a whole. Globally, according to tobacco industry estimates, 33 million people farm tobacco, albeit many of them part time and most in addition to other crops.1 Approximately half that number work in tobacco product manufacture, distribution, and retailing. In addition, another 10 million or so are employed in supplier industries providing materials and services to the tobacco …

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