Think Inc.
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The economics of choice

Smoking is a business decision

By Eric Abrams


I've heard various arguments for and against the bill banning smoking in restaurants. None seem to say what I think needs to be said so here is my perspective, as an economist.

Economists believe people make choices to make themselves happier (maximize utility is the technical phrase). Sometimes people make a choice that causes other people to be less happy (negative externality). Smoking, for example, is something people choose to do and as a result other people are less happy (perhaps even unhappy). While I do understand the extreme measure to correct this in restaurants, the unfortunate result is that some people are still made less happy, but they are now different groups than were in this position before the bill passed.

Now the smokers are adversely affected, as are the restaurant owners.

The main problem with the bill is it forces a correction to a situation that could have been resolved by choices.

If non-smokers choose to go into a restaurant where smoking is allowed, they have the same choice the smokers have -- to smoke or not to smoke.

Restaurants have designated smoking and non-smoking sections to meet the needs of both. I will admit though, that sometimes the non-smoking section may as well be the second-hand smoke section.

However, if this is the case, non-smokers can voice their disapproval in verbal or written form, or better yet, combine one of these with the threat of not giving this establishment their business.

Now the business owner would have to make a choice. Improve the situation or try to cater strictly to the smokers.

This could lead to a self-selection process whereby two customer bases are created -- smokers (and tolerant non-smokers) and non-smokers (and smokers who can abstain). Each of these groups would exercise their economic power in choosing restaurants. Alternatively, a restaurant may come up with a way to satisfy both groups simultaneously.

The business owners would ultimately have final say. After all, it is their business and it is their lost sales that will result from the bill.

There is, of course, an upside to the bill. Now it has succeeded I won't be subjected to the television commercial, which drives me insane (yes, I could choose to change the channel). You know the commercial I'm referring to. It starts with a waitress saying "Eight hours in here," referring to a smoky restaurant in which she is apparently forced to work.

The reality of it is that she doesn't have to work there anymore than the politicians had to pass this bill, which will only hurt this industry.

I simply wish people were left to choose. Nobody forces non-smokers to sit in restaurants with smokers. Nobody forces waitresses to have a certain job. Nobody forces politicians to pass a bill.

Nobody forces us to vote for those politicians. Right?

Eric Abrams is an associate professor of economics at Hawaii Pacific University. He can be reached at

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