Information Failures: Health Warnings on Cigarette Packets

Henry Wingfield writes about the impact of health warnings on cigarette packets - they have proved effective in many countries but should the bar be raised in the UK? They are certainly considering it in the United States as the embedded video below suggests.

Information Failure in the Market for Tobacco

It has been proven for many years that the consumption of cigarettes will lead to serious, long term and irreversible health consequences such as lung, throat and tongue cancer as well as emphysema and heart disease. 50% of lifetime smokers will die from their habit, half of which occurring in middle age. Despite these startling facts, UK smokers consumed 58.5 billion cigarettes in 2009. This would lead to the assumption that there is gross information failure in the market for cigarettes.

Although in recent years there has been a drive by the government to ensure that smokers were properly aware of the dangers of smoking in an effort to close any information gaps between consumers and tobacco companies. For example, cigarette packets in the UK have to, by law, display sizeable and graphic health warnings on both sides of the packet. More recently, smokers have been subjected to corpses, cancer patients and diseased lungs on packets in a further attempt to narrow the information gap in the market.

Research shows that these images and warnings have a dramatic effect on the consumption of cigarettes, when Thailand adopted health warnings for all cigarette packets, the number of regular smokers declined by almost 20%. Similarly, a study in Canada found that 15% of Canadian smokers had been deterred from having a cigarette when showed the picture warnings.

Other steps that the government has taken to try and educate people to the risks of smoking include public health announcements, a ban on tobacco advertising that ‘glorified’ smokers and the groundbreaking smoking ban that was introduced in 2007, although the latter two points are not conventional methods of trying to close the information gap, it ensures that people are not mislead or easily tempted in taking up the habit.

In the UK today, there aren’t really any asymmetries of information, particularly after the extensive anti-tobacco campaigns and bans that have occurred over the last decade. As a result, most modern day smokers are aware of the risks they are taking by smoking, but they choose to continue their expensive and ultimately fatal addiction.

There are many different ways that the problem of information failure can be dealt with. Most notably, public broadcasts informing smokers of both the financial and biological true cost of their habit. Governments can also withhold medical treatment for patients wanting treatment for smoking related diseases until they have quit. Further measures include increasing the demand for information by making it free (NHS health pamphlets), along with supporting and promoting the formation of anti-smoking groups, which campaign for more knowledge to be made available by producers. A simpler way of relating the seriousness of smoking is by raising the age of consumption (in the UK from 16-18 in 2007).