Winner of the New Statesman SPERI Prize in Political Economy 2016

Saturday, 19 July 2014

A short note on tobacco packaging

About a year ago I published a post that was off my macro beat, about whether banning advertising was paternalistic or freedom enhancing. It was prompted by the UK government appearing to kick the idea of enforcing ‘plain packaging’ of cigarettes into the long grass. Subsequently the government seemed to change its mind, and asked paediatrician Sir Cyril Chantler to review the Australian experience, where plain packaging had been introduced more than a year earlier. In April this year the UK government announced that it would go ahead with plain packaging, after a ‘short consultation’.

The standard argument against actions of this kind is that they are paternalistic. Most economists are instinctively non-paternalistic, although personally I think paternalism can be justified in a small number of cases, like the compulsory wearing of seat belts. Furthermore, I think as behavioural economics progresses, economists are going to find themselves becoming more and more paternalistic whether they like it or not.

However my argument on advertising was rather different. Most advertising is not ‘on-demand’: we have to go out of our way to avoid it. Examples would be television advertising, magazine advertising or billboard advertising. A lot of advertising also has no informational content, but instead tries to associate some brand with various positive emotions - a mild form of brainwashing. A ban on this kind of advertising enhances our freedom, making it less costly to avoid being brainwashed. Banning advertising allows us to avoid unwanted intrusion by advertising companies. It enhances rather than detracts from our freedom. Of course it restricts the freedom of companies, but companies are not people.

What appears on a packet of cigarettes is different, because it is ‘on-demand’ - only those buying the product view it. However it is almost invariably of the non-informative kind. In contrast, ‘plain packaging’ is actually informative, about the health risks being faced by the smoker. So in this case, the smoker receives more information under plain packaging, so will be better off. Arguments by the industry that this represents a ‘nanny state’ are nonsense, and are akin to potential muggers arguing that policemen represent a gross violation by the state of the rights of the mugger.

The UK decided in April to adopt plain packaging because the evidence from Australia was that it was having a positive impact. More recently, the Financial Times reports that the latest National Drugs Strategy Household Survey shows a sharp decline not only in the number of cigarettes smoked per week, but also a large rise in the age at which young people smoke their first cigarette. (The cigarette industry and their apologists argue that smoking has in fact increased as a result of the ban, so strangely they are against it!)

This shows how in at least one respect Australia is helping lead a global improvement in peoples’ lives. Alas the new Australian government has also just abolished their carbon tax, which unfortunately means we need to be selective in following an Australian example!


  1. A few points:

    a) The 'on-demand' arguement is not the whole story - part of it is about the extent to which flashy cigarette patterns are part of the 'cool' image of smoking - and the way this advertises smoking and a the brand to non-smokers - especially younger people. So in this way it is seen that pulling out a drab 'olive brown & black' packet and lighting up does not advertise smoking as an attractive behaviour.
    b) "we need to be selective in following an Australian example" - Australia is a democracy and unfortunately this means that we have political parties that frequently do stupid things and occassionally sensible things.

  2. It was always an odd thing that Milton Freidman found himself alongside Michel Foucault in recommending the legalisation of all drugs.

    Shiller gets at this in his Nobel speech, saying:

    "Institutions can be redesigned so that they reframe people’s thinking, to the longer term and to things that are better subjects for their attention, by making markets for risks that are better tied to fundamentals people should be thinking about. Institutions that change framing might sometimes qualify as institutions providing a “nudge” as Richard Thaler and Cass Sunstein (2009) have put it, suggesting the right direction for people without being coercive. They base their thinking on a philosophy they call “libertarian paternalism” emphasizing the government’s providing incentives for appropriate behavior without coercion. Though our groundings in behavioral economics are similar, I wouldn’t stress that term, perhaps because it seems to suggest a top-down structure for society, with government at the top. The development of financial capitalism seems to be, or can be, a matter of the voluntary organization of most of society, integrating the activities of people in all walks of life in fulfilment of their diverse purposes. A vision for a better financial capitalism should not be top-down at all."

  3. Cigarette packaging isn't 'on demand' either...

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