The Economic Effects of Smoking Bans

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Studies on the Economic Effects of Bans

Anti-smoker activists claim smoking bans are good for business. They claim their studies prove it. This page examines how they concoct their numbers. We won't be dissecting any one study, instead we'll give you the tools to pick apart any study funded by anti-smokers.

Fact: All Bans are Not Created Equal.

Nannies often point to California's ban to "prove" bans are good for business. According to state tax revenues, California's hospitably industry experienced a 5% increase in revenue the year after the ban was passed. Nannies ignore the fact the ban was imposed at the peak of the most successful economic period in our country's history, when most other states were reporting 10-15% increases in the same venues.

California's ban was quite different from most recently passed restrictions. The CA ban exempted owner-operated bars. (Some places made all their employees part owners to take advantage of this exemption. Some small taverns fired all their employees so they could qualify for the exemption) But the biggest difference between CA and other places where bans have killed business is the climate. The near perpetual summer of CA, combined with few restrictions on outdoor smoking, made it fairly easy for most taverns to provide an outdoor smoking area. In contrast, NY state winters feature subzero wind-chills, and the NY law limits outdoor smoking to 25% of outdoor seating. It even makes it illegal to provide any kind of awning, umbrella, or cover for smokers. (How mean-spirited is that?)

In areas where the bans are not strictly enforced, compliance with the law may be as low as 50%. Obviously, establishments that are not complying are not suffering because of the ban. They may even increase their business, as smokers will patronize their business instead of places that enforce the ban. The issue of compliance is ignored in these studies.

Fact: Bans affect some business much more than others.

Obviously, a business that already prohibits smoking isn't going to be affected at all by a ban. These include delicatessens, bakeries, fast food chains, and take out places. Take out places usually benefit from ban, because they are patronized by smokers who decide to stay home. Anti-smokers usually include these unaffected businesses in their studies.

Smoking is less common among the wealthy, so bars and restaurants catering to an upscale crowd aren't nearly as affected as places with a working-class clientele. (Some taverns report 80-90% of their patrons are smokers.) Small town diners, where people like to hang around and chat after a meal, are also hurt by bans. The economic differences between upscale and working class palaces gives the nanny's studies a particular advantage. If a small diner loses $200 dollars a day, it may represent a 50% loss for their business, while an upscale restaurant can make up that difference with a single meal.

Fact: Studies funded by anti-smoker groups usually include places that are not at all affected by bans, as well as those where the effect is minimal.

The most important part of any hospitality business is location, location, location. When the smoking ban was issued in New York, bars near the borders of smoker-friendly states saw their smoking customers, along with the smokers non-smoking friends, make the short trip to New Jersey or Pennsylvania so they could enjoy themselves without being harassed. Border bars in those states are reporting record profits, while many NY taverns near the border closed down for lack of customers.

Bingo Halls usually report losses of 50% or more due to bans. Many have closed. Bingo is a very social game. People go there to hang out with their friends as much as they do to play the game. Many patrons simply don't go if they can't smoke. As a result, charities depending on bingo profits have to cut back on services, and sometimes eliminate them...
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