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A study of cost-benefit analysis of smoking in the Czech Republic by the tobacco company Philip Morris.

“The highest principle of morality whether personal or political morality is to maximize the general welfare or the collective happiness or the overall balance of pleasure over pain -in a phrase maximize utility-.”

Utilitarian philosopher Jeremy Bentham

This utilitarian logic, under the name of cost-benefit analysis which is used by companies and by governments all the time and what it involves is placing a value -usually a dollar value- to stand for utility on the costs and the benefits of various proposals.

A few years ago, there was a proposal in the Czech Republic to increase the excise tax on smoking. Philip Morris, the tobacco company, does huge business in the Czech Republic. They commissioned a study of cost – benefit analysis of smoking in the Czech Republic. And what their cost – benefit analysis found was that the government gains by having Czech citizens smoke.

Now how do they gain? It’s true that there are negative effects to the public finance of the Czech government because there are increased health care costs for people who develop smoking-related diseases. On the other hand there were positive effects and those were added up on the other side of the ledger . The positive effects included, for the most part, various tax revenues that the government derives from the sale of cigarette products but it also included health care savings to the government when people die early, pension savings (you don’t have to pay pensions for as long) and also savings in housing costs for the elderly.

 And when all of the costs and benefits were added up, the Philip Morris study found that there is a net public finance gain in the Czech Republic of a $147 million, and given the savings in housing and health care and pension costs, the government enjoys the saving of savings of over $ 1227.00 per person who dies prematurely due to smoking. Cost – benefit analysis!

Now, those among you who are defenders of utilitarianism may think that this is an unfair test. Philip Morris was pilloried in the press and they issued an apology for this heartless calculation. You may say  that what’s missing here is something that the utilitarian can easily incorporate, namely the value to the person and to the families of those who die from lung cancer. What about the value of life? Some cost-benefit analyses incorporate a measure for the value of life. One of the most famous of these involved the Ford Pinto case. This was back in the 1970’s. This was a small car, subcompact car, very popular but it had one problem which was that the fuel tank was at the back of the car. So,  in rear collisions the fuel tank exploded and thus some people were killed and some severely injured.

(Professor Michael Sandel, “Justice”, Harvard University)

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