Jeff points me to this news article and asks, Can this be right?
Hmmm . . . the article defines “wealthier smokers” as “those earning 60,000 or more.” So suppose a “low-income smoker” makes $20K, then 25% is $5000, which is $100 a week, or $14/day, which according to the article is roughly the cost of a pack of cigarettes. So I guess it’s possible. It just depends where you put the cutoff for “low-income” and where you put the cutoff for “smoker.” I also wonder whether the numerator and denominator are comparable. It might be that if you add up all of these people’s expenses and divide by their income, you’ll get a ratio of more than 100%.
By far the cost of a pack of cigarettes is taxes, which would mean your example person is being taxed at about 20%+ of income in cigarette taxes only.
Of course, we then get into the argument that cigarette “taxes” are like lottery “taxes” — they are taxes we aren’t forced to pay if we don’t smoke or don’t buy lottery tickets. And so we’re back to arguing about the morality of the poor.
I don’t think morality enters into this, it’s addiction of children.
As per Golden Holocaust, mentioned by Andrew in this post.
From my review @ Amazon:
‘I repeat just one of many horribly-fascinating quotes (p.114), from Bob Herbert’s interview with David Goerlitz, the “Winston Man.”
‘Goerlitz then asked whether any of the company’s executives smoke and got this answer:
“Are you kidding? We reserve that right for the poor, the young, the black and the stupid.”‘
See tobacco archives, search results for “poor areas” billboards. Poorer areas were disproportionately targeted.
Sere Proctor, Index: market targets.
You might why “monkeys and the dead” are included under that index item. I hadn’t recalled that market segment :-)
I doubt there are really any “better” marketeers than the cigarette guys.
@Andrew
I believe your intuition is dead on. It is fairly common in survey data (IIRC the Census Current Population Survey) for low income households to have consumption greater than income without increases in borrowing, implying that income is seriously under-reported.
Maybe the poor would have to sell off some of their already pre-existing wealth (houses, cars, books, etc.) rather than to borrow more money to pay for their consumption.
but the underreporting of income makes more sense (especially since if you underreport income, you can pay less taxes).
This makes absolutely no sense whatsoever. These ‘findings’ (is that study published anywhere?) would imply that people who earn $40k would on average smoke double the amount of what a $20k person would smoke. Of course, one could argue that these 25% is an average for all who earn less than $60k and so does not necessarily mean that it is 25% at all levels of income, given income <$60k. In any case, these 'findings' clearly demonstrate that it is usually a bad idea to coerce quantitative information into some form of binary information, based on some entirely arbitrary cut-off points (probably due to an ongoing desire in humans to coerce the world into some kind of dualism). For example, a $60k person smokes 2 packs a week according to the 2% mentioned in that article (60k*0.02/50=$24) whereas the $40k person smoke 2 packs a day. Really? Why can't they just plot the fraction of tobacco expenses/income as a function of income or something like that and let their audience decide about what it thinks is a low or a high income? It would also show the non-linear relation between tobacco expenses and income (I have no knowledge of tobacco research but the relation must be non-linear as the Wall Street guys probably don't smoke 10 packs a day :)) and would prevent readers from nonsense conclusions like I did above.
Source
http://www.plosone.org/article/info%3Adoi%2F10.1371%2Fjournal.pone.0043838
“In 2010–2011, smokers nationally spent 8.8% of their household income on cigarettes, whereas smokers in New York spend 12.0%. ”
They estimate that New York smokers average 15.2 cigarettes per day = 277 packs per year, and smokers nationwide average 17.6 cigarettes per day = 321 packs/year, fairly constant across income brackets (there’s a slight downward trend – wealthier smokers smoke less often). They also report that the average price per pack is $7.95 in New York and $5.21 nationally. Which would put the average spending per smoker at $1672 nationwide and $2202 in New York (actually less, since they report that a significant share of all NY tobacco is bought out of state, because NY excise taxes are so high). Low income is defined as “less than $30,000”. The article claims that low-income New Yorkers spend 23.6% of income on cigarettes. This would put the average income among the under-30,000 group right around $10,000.
There is a number of problems with the study. The most obvious:
* There’s a lot of missing data, making it hard to figure out their logic.
* They seem to assume that smokers of all incomes are equally likely to consume bootlegged/out-of-state tobacco.
* They probably assume that low-income smokers buy their 277*(11.0/10.3) packs at the NY average price of $7.93/pack. Even that would put average spending per under-$30,000 smoker at $2346 and their average income at $9940. It’s hard to imagine how that could be possible, unless there’s a whole lot of income underreporting going on (e.g. responders almost certainly fail to report things like food stamps.)
See Orwell on the poor and sensible diets.
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The ordinary human being would sooner starve than live on brown bread and raw carrots. And the peculiar evil is this, that the less money you have, the less inclined you feel to spend it on wholesome food. A millionaire may enjoy breakfasting off orange juice and Ryvita biscuits; an unemployed man doesn’t. Here the tendency of which I spoke at the end of the last chapter comes into play. When you are unemployed, which is to say when you are underfed, harassed, bored, and miserable, you don’t want to eat dull wholesome food. You want something a little bit ‘tasty’.
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Read the whole thing.
Also FWIW there are a lot of black market cigarettes available in poorer areas in NYC which are w/o tax.