Social Costs of Smoking

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What are the ‘costs of tobacco’?

The costs of tobacco refers to the value of the net resources which in a given year are unavailable to the community for consumption or investment purposes as a result of the effects of past and present tobacco consumption, plus the intangible costs imposed by this consumption. The total costs of smoking include both private costs (knowingly and free borne by rational smokers) and social costs (borne by community). Social costs include both tangible and intangible costs. Tangible costs refer to costs spent on resources which would have been available had there been no smoking, for example hospital costs. They are borne by individuals, businesses and governments and when reduced release resources for other uses. Intangible costs are borne solely by individuals and are generally much harder to value. They include costs associated with pain, suffering and loss of life.

Counting the costs of tobacco and the benefits of reducing smoking prevalence in Victoria

Professor David Collins and Professor Helen Lapsley were commissioned to undertake research into the Social Costs of Smoking in Victoria.

The objectives of the research were to:

• Estimate the social costs of smoking for Victoria for the 1998/99 financial year;
• Estimate the benefits in terms of a reduction in the social costs of smoking which are likely to arise from a reduction in smoking prevalence in Victoria from 17% (1) to 12%;
• Estimate the social benefits to be gained from effective anti-smoking programs.

The report found that:

• The total social costs of smoking in Victoria for the 1998/99 financial year were approximately $5.05 billion.
• Victoria bore 24 per cent of the total Australian social costs of smoking in 1998/99.
• Smoking in Victoria costs residents about $4.3 billion each year. Businesses and governments bear about $494 and $207 million in costs each year respectively

See the document below for the full report.

Download

Counting the costs of tobacco and the benefits of reducing smoking prevalence in Victoria (223kb, pdf)

References

1. Durkin S, Germain D, Letcher T, Lipscomb J. Smoking prevalence and consumption in Victoria: key findings from the 1998–2003 population surveys. CBRC Research Paper Series No. 12. Melbourne, Australia: Centre for Behavioural Research in Cancer, The Cancer Council Victoria, March 2005.

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