The tobacco economists network - or how the Tobacco Institute recruited over 100 American economics professors. Part 4 of many

Overview of the previous chapters here

The path to the social cost strategy

Ultimately, the goal of the research done by the consultants was to provide ammunition for the tobacco industry facing the social cost issue.

This 1979 memorandum by Ernest Pepples (vice-president of Brown & Williamson)  shows the tobacco industry realised something important

Instead of trying to argue that it is not 90,000 hospital beds which are attributable to cigarettes but only some figure less than 90,000, the better attack is to take the adversary onto higher conceptual ground. It is also important, of course, to identify and critique the errors of the attacking papers and do a solid professional job of exposing the flaws in them.

Even if the tobacco industry would be able to prove science was wrong and smoking 'only' results in 40.000 hospital beds instead of 90.000, it would still imply the industry admitting smoking is harmfull,. This still would be a marketing disaster.

The industry realized this would be a dead end. A different strategy was needed, one that couldn't backfire. 

In 1984, the industry implemented the lobbying strategy it had developed on social cost. But this attack did not appear out of nowhere, and the Tobacco Institute had been working on the subject since at least 1979, the time of the Berman memo. Before launching the lobbying strategy the industry wanted to know which aspects of the broad domain of social cost could be attacked.

The first research on social cost consisted of :

1.     identifying key issues that could move public opinion on the social acceptability and social costs of smoking,

2.     testing possible countermeasures that could alter public opinion in favor of the industry

3.     exploring the feasibility of creating an intensive, long-term, industry-wide effort to improve public opinion and tolerance of smoking

In order to identify key issues suitable for lobbying, the industry hired several consultants, the 1979-memo from above also mentions the head consultants at the time: 

• Robert D. Tollison (Economics)
• Martin Gruber (Finance)
• Sherwin Feinhandler (Anthropology)
• Peter Berger (Sociology)
• Robert Nozick (Philosophy)
• Edward Harris (Political science)

It shows the industry was investigating different scientific fields related to social cost, and had several other scientific fileds in mind like actuarila science, statistics, social psychology, ...

Most of the consultants are known for their strong libertarian viewpoints. It will become clear this is no coincidence.

Tobacco consultant George R. Berman (Philip Morris) wrote a long text in September 1979 explaining why the industry sponsored work in such a variety of scientific domains

When this research is completed we will have a foundation for dealing with the social cost issue. We will have attacked its economic reasoning. We will have looked at the dark side of its philosophy, and related that philosophy to the larger motives of the anti-smoking leadership. We will have explored the social benefits of smoking, and the social costs of smoking restrictions. Hopefully, we will be able to stop this attack before it stops us.

Berman proposed an attack using four themes

1. These social cost concepts are bad economics
2. They do not fit into a philosophy of personal freedom and civil liberty
3. Smoking benefits society and its members in many complex ways
4. Anti-smoking programs and groups are harmful to our society
5. Thus, our project is concerned with both social costs and social values.

Interestingly the four points listed by Berman show he did not simply want an attack on social cost science. There is also a part showing the industry wanted to lobby by focusing on people's 'social values', for example by telling people: 'it is YOUR choice to smoke, and the government should not interfere with your freedom of choice'.
Of course, the industry was well aware smoking :
1) through ETS also affects others, so smoking is not just a matter of personal liberties
2) is not necessarily a personal choice, but is influenced by a cultural factors. Even though we might think we are fully rational individuals and we are the only ones making our decisions, this simply is not true. Our 'free will' is not as free as we want to believe. It has been well documented people's surroundings have an influence on whether someone will start to smoke or not.

While it is possible -at least to some extent- to objectify and measure 'freedom' (it is possible to measure in which countries it is possible to walk on the street wearing a t-shirt with a political slogan, without being jailed), it is also possible to turn 'freedom' into a value-loaded moral component. By using arguments like: 'they are not attacking tobacco, but anti-smoke regulations are oppressing people' or even on a personal level: 'they are not attacking cigarettes, but they are attacking YOU, as a person', these arguments aim for people's underbelly, and that's exactly the subjective emotional part of the message the industry wanted to exploit. Feeding a person's bias is always useful to manipulate them in the desired direction.

Genuine scientific output was not a goal of the tobacco industry's research. As George Berman made clear in 1979, the research had no other purpose than to provide material for lobbying:

The economists working on this project are first developing a "layman's guide" to social cost/benefit analysis. The attacks against us claim to use economics to justify further action. The Layman's guide will address three key questions.

This passage makes clear the research should result in ‘easy’ arguments the industry could use when talking with, for example, legislators. Several LTDL documents show the industry complained the output of the economic consultants was too technical and therefore not suited to translate into popular arguments. This does not mean the industry did not want the research to have a 'scientific' side, because it also was beneficial for the industry to have reports with academic credibility proclaiming that the idea of using social cost was flawed. This is explained in the anonymous document from 1980 titled Goals of the social costs/social values project. The final goal though always was to use the 'science' as a ground for lobbying.

The objective of these two projects [the first social costs reports] is to generate papers relevant to the social cost of smoking which can then be used as references in direct confrontation with the issue. Through a sequence of steps, the favorable conclusions of these papers can be infused into professional journals and then into the popular press.

The 'scientific' output also had the advantage it could be used to attract more scientists, and indeed the economists later on would appear at conferences (this will be illustrated in another chapter), trying to convince their peers that using social costs is flawed. Indeed, googling shows that other academics started quoting the work of the tobacco economists in genuine academic papers.

Berman gives some examples of what the industry wanted as output from the economists. The economists should deny the mere existence of a tobacco related social costs, e.g. by denying medical expenses due to smoking are actually social costs. Berman wrote (emphasis added):

There may be a few cases where smoking creates uncompensated costs for non-smokers. But the economists are quite certain that most of the alleged medical expenses do not qualify as social costs. And the much larger charges of absenteeism and lost productivity are not social costs at all.

Berman concluded

It can be shown that my absence from work does not cost you anything

Berman does not deny smoking will lead to higher absenteeism.

Berman is drawing the 'personal freedom' card here, but his argument is nonsense: absence from work does affect others, including the employers of the smoker. Their employees’ absence means they are less productive, or exactly the thing making the employer money. Moreover, fellow employees who must cover for the smoker are not be able to do their own work.

Berman's text also explains why the Tobacco Institute consulted the philosopher Robert Nozick

Unfortunately, the use of social economics is often a disguise for expressing a particular political philosophy. Thus, if a worker is absent because of illness allegedly related to smoking, there is said to be a social cost. But no one seems to consider skiing accidents as a social cost, and certainly not the time spent on holiday. So whether absenteeism is a social cost seems to depend on how you feel about the cause! This is an area of philosophy, where we need to look at what people have a right to do to themselves and to each other

(...)

The philosopher looks at some subjects which are important, but very difficult for the economist to deal with. For example, there is a value to having a government which does not interfere with personal behavior and freedom of choice . If such restrictions are being considered, for "social cost" reasons, the loss of these freedoms must be counted as part of the cost of the government policy

Again, Berman takes some illogical steps, like

Lost working time is a social cost only if my labor belongs to the state. Then, of course, society has a right to protect its property, without much regard for what that "property" would prefer.

Lost working time affects private market employers. If all employees are on sick leave, not much profit will be made. Smoking related illnesses affect the sick person’s family. The illness could mean that the smoker's partner must rearrange schedules to pick up the kids from school, possibly causing employment problems or other emotional stress. The smoker’s illness has a social cost. Berman's logic is deeply flawed.

Nevertheless, Berman tries to play the card of personal freedom

But if I am restricted from smoking because it bothers someone else, I have lost my benefits, that is, a cost has been placed on me . Don't those who benefit from this restriction owe me compensation for my lost benefits? Or do anti-smokers have exclusive ownership of the air rights in a public place? As another philosopher put the matter recently, there is a limit to the extent we are mortgaged to one another.

Here we come to one of the libertarian ideology's core points: freedom, freedom, freedom. No, it is not a coincidence the tobacco industry hired a libertarian philosopher.

If social cost/benefit analysis itself implies a concern for people, the issue comes down to a quote from dr. Nozick's book on libertarian philosophy :

Why not interfere with someone else's shaping of his own life? Because anyone might come up with the pattern of life you wish to adopt. Therefore, it is in your own self-interest to allow another to pursue his conception of life as he sees it. You may learn from his example.

As mentioned above, tobacco does not affect only the smoker. Berman had poor reasoning skills, or the industry was aware that in the search for allies, they should try to feed libertarians the things they wanted to hear.

The use of a cultural anthropologist also is explained by Berman:

Sherwin Feinhandler is a cultural anthropologist who has examined reports on the social role of smoking in over 180 different cultures. As a result of these studies, he is convinced that smoking provides certain universal benefits, although they may appear in different forms from time to time and in different societies. Dr. Feinhandler's basic position is that smoking enables people to function better in society, reduces social frictions. He also believes that many anti-smoking programs and restrictions increase social tension.

With the help of the work done by the consultants, the Tobacco Institute was prepared to develop a lobbying strategy. Berman suggested six counter measurements (they would be altered in the final strategy from 1984). Berman concludes

If we use these countermeasures wisely, we can sharply reduce, or eliminate, social cost as an issue in the social acceptability of smoking

It is clear the industry simply researched the social cost issue to be able to create an instrument for lobbying. When the research of their consultants was finished, the next step for the industry was to decide which research could be used in its lobbying-strategy.