Smoke-Free Environments Law Project -- Economic Impacts of Smoke-Free


As businesses and places of public accommodation increasingly consider implementing smoke-free policies, questions arise concerning the economic impact of such policies. These same concerns are presented when communities propose smoke-free ordinances. Likewise, questions arise about the economic impact on employers of continuing to allow smoking in the workplace or in public places.

In this section of the SFELP web site, we have provided links to authoritative articles and studies which address various issues concerning the economic impact of smoke-free policies and laws. These articles focus both on the impact on employers/businesses of adopting smoke-free policies and on the economic impact of not having smoke-free policies, since there are clear costs to employers and businesses which continue to permit smoking.

Additional materials will be added to this site on a regular basis.



Businesses which consider adopting smoke-free policies, particularly hospitality industry businesses such as restaurants and bars, are concerned about the economic impact of such policies on their businesses. Likewise, when communities or states propose adopting smoke-free ordinances or regulations, business owners, policymakers and the public are concerned about the possible economic effects of such policies. While the tobacco industry has for years stated that smoke-free policies will reduce customer patronage of smoke-free businesses, there are no credible, scientific studies that support these claims. We have attempted, below, to compile scientifically reliable reports, and articles about such reports, which examine these issues.


Economic Effects of Environmental Tobacco Smoke

This major new study of the above title was released in August, 2005 by the Society of Actuaries. The study was authored by Donald Behan, Michael Eriksen and Yijia Lin. It states environmental tobacco smoke (ETS) has been shown to be associated with increases in rates of cancer, morbid conditions of the respiratory and cardiovascular system and increases in the rates of spontaneous abortion and perinatal mortality. The authors combine exposure data, data on increased morbidity and medical and indirect cost data, all derived from published reports, to estimate the total economic cost of ETS exposure in the United States. Total annual costs for conditions with well-documented increases in morbidity, excluding economic losses related to pregnancy and the newborn, are estimated at over $5 billion in direct medical costs and over $5 billion in indirect costs. To access the full 94-page study, in pdf format, click above.


Impact of a Smoking Ban on Restaurant and Bar Revenues -- El Paso, Texas, 2002

This report from the Feb. 27, 2004 Morbidity & Mortality Weekly Report published by CDC found the following: Smoke-free indoor air ordinances protect employees and customers from secondhand smoke exposure, which is associated with increased risks for heart disease and lung cancer in adults and respiratory disease in children. As of January 2004, five states (California, Connecticut, Delaware, Maine, and New York) and 72 municipalities in the United States had passed laws that prohibit smoking in almost all workplaces, restaurants, and bars. On January 2, 2002, El Paso, Texas (2000 population: 563,662), implemented an ordinance banning smoking in all public places and workplaces, including restaurants and bars. The El Paso smoking ban is the strongest smoke-free indoor air ordinance in Texas and includes stipulations for enforcement of the ban by firefighting and law enforcement agencies, with fines of up to $500 for ordinance violations. To assess whether the El Paso smoking ban affected restaurant and bar revenues, the Texas Department of Health (TDH) and CDC analyzed sales tax and mixed-beverage tax data during the 12 years preceding and 1 year after the smoking ban was implemented. This report summarizes the results of that analysis, which determined that no statistically significant changes in restaurant and bar revenues occurred after the smoking ban took effect. These findings are consistent with those from studies of smoking bans in other U.S. cities. Local public health officials can use these data to support implementation of smoke-free environments as recommended by the Task Force on Community Preventive Services. Editorial Note: No decline in total restaurant or bar revenues occurred in El Paso, Texas, after the city's smoking ban was implemented on January 2, 2002. These findings are consistent with the results of studies in other municipalities that determined smoke-free indoor air ordinances had no effect on restaurant revenues. Despite claims that these laws especially might reduce alcoholic beverage revenues, the mixed-beverage revenue analyses indicate that sales of alcoholic beverages were not affected by the El Paso smoking ban. Click above to access the full report.


Major new review of the quality of studies on the economic effects of smoke-free policies on the hospitality industry

A major study was released in February, 2003 in Tobacco Control Journal which assessed the quality of various studies on the economic effects of smoke-free policies on the hospitality industry. The study, by Scollo, Lal, Hyland & Glantz, found that no-smoking policies in restaurants and bars don't harm business, despite concerted efforts by the tobacco industry to prove otherwise. The researchers trawled online databases and print references for all studies produced on the economic impact of smoking bans in bars and restaurants up to the end of August 2002. They included unpublished tobacco industry research, and in total, assessed the findings of 97 studies. The quality of the studies concluding that smoking bans adversely affected revenues, was poor, the authors found. These studies were four times as likely to use subjective rather than objective measures to estimate impact, and they were 20 times as likely not to be peer reviewed. Further, all the studies concluding that smoking restrictions harmed the hospitality industry were funded by the tobacco industry or its allies; none were funded by sources that were clearly independent of the tobacco industry. Only one of the 31 industry funded studies had been published in a peer reviewed journal compared with almost 40% of those funded from other sources. And none of the industry studies met all the accepted criteria for quality, compared with over a third (35%) of those funded from other sources. None of the 21 quality studies reported a negative impact, while four reported that bans had a positive effect on sales. On the basis of the quality of the evidence, fears that smoking bans in bars and restaurants eat into revenues are unfounded, stated the authors. And policy makers wishing to reduce exposure of employees and patrons to the dangers of secondhand tobacco smoke should be reassured by these findings, said the authors. To access the study, click above.


Summary of Studies Assessing the Impact of Smoking Restrictions on the Hospitality Industry

This analysis -- prepared by Michelle Scollo and Anita Lal, of VicHealth Centre for Tobacco Control in Melbourne, Australia -- examined most of the major, reputable studies of the economic impact of smoking restrictions on restaurants, bars and related facilities. The authors concluded that no negative economic impact from smoking bans in restaurants and bars was indicated by the studies which based their findings on taxable sales receipts. For the full analysis in pdf format, click above.


Australian Study Finds Restaurants Have Few Problems with Customer Compliance with Smoking Bans & Receive Favorable Responses from Patrons

In a study released in May, 2001 in the Medical Journal of Australia, researchers examined compliance with smoking bans in restaurants in Sidney and Melbourne and found that smoking bans imposed by law actually reduced compliance problems versus the experience with voluntary smoking bans in Melbourne. The study found that smoke-free restaurants do not require "smoking police" to gain compliance with smoking bans and attract more favorable than unfavorable comments from patrons; further, smoking bans do not adversely affect customer patronage. Click above for the full journal article.


Former head of NEW YORK RESTAURANT ASSOCIATION Supports Smoking Bans

In the April 16, 2001 issue of Nation's Restaurant News, Michael O'Neal, in the "Opinion" section states the following: "I have been active in several restaurant associations for the past 35 years. I've served as president of the New York State Restaurant Association as well as president of the New York City chapter. I was a member of the board of the National Restaurant Association for nine years and have been an honorary director for 17 years. I've lobbied on the side of the restaurant industry for all of those years in New York; Albany, N.Y.; and Washington, D.C. Always I had the plight of the small-business man in mind. Having said that, I feel strongly that it is pro-business and pro-health to eliminate smoking in all workplaces, including restaurants. Smoke-free workplace legislation does not hurt business." He goes on to present his view that restaurants and their associations should be leading the fight for smoking bans, not fighting them. His statement is a strong endorsement, from an unusual source. Click above for his full opinion piece.


RESTAURANT UNION PRESIDENT Endorses Smoke-Free Restaurant Laws as Good for Employees and for Economic Impact on Restaurant Business

On February 26, 2001, the President of San Francisco's Hotel and Restaurant Employees Union wrote a letter endorsing the passage of smoke-free restaurant laws. His support was based on the experience of having lived for five years with smoke-free laws. He said that many hospitality-based unions had feared such laws initially out of concern about the economic impact they might have on the restaurant business and, thereby, on the jobs of restaurant employees. He stated that his union has discovered that smoke-free laws are good for business and that they hold down medical costs, as well as reduce lost work time. He concludes by stating that this is a worker's rights issue as well, because no worker should have to breath someone else's smoke in order to hold a job. For the full letter of support, click above.


San Luis Obispo CHAMBER OF COMMERCE Supports Smoke-Free Legislation Based on their Experience with Local Smoke-Free Law

On January 29, 2001, the President/CEO of the San Luis Obispo Chamber of Commerce in California sent a letter to Nebraska state Senators urging them to support bills to make all workplaces smoke-free. The support of the Chamber of Commerce was based on their experience in San Luis Obispo, which they say was the first city in the world to ban smoking in all public buildings, including bars and restaurants. While they had been fearful of such a law initially, they have found that, since the law was enacted in 1990, "the effects have been extremely positive." They have found that the number of eating and drinking establishments in the city have grown, taxable transactions in these places have eclipsed statewide levels, the number of tourists have grown exponentially, and the transient occupancy taxes collected are at a record high. In fact, they believe the law has been a positive draw to the city for tourists. They also found that restaurants just outside of the city ended up voluntarily going smoke-free in order to compete effectively. Click above for full letter from the Chamber president.


73% of California Bar Patrons Support Smoke-Free Law

On October 16, 2000, the results were released of an independent statewide survey in California by respected polling firm, Field Research Corporation, which found that 73% of those bar patrons polled approved of the California law prohibiting them from smoking in bars. This is a dramatic 24% increase from the 59% level when the law took effect in 1998. Further, the poll, conducted in June/July, 2000, found that 75% of bar patrons say that a smoke-free environment in clubs, bars, lounges and restaurants with bars is "very important" or "somewhat important" to them. In addition, 72% of bar patrons say they are concerned about the effects of secondhand smoke on their health. Other key survey findings include the following: 91% of bar patrons either go to bars more often or have not changed their bar-going behavior as a result of the smoking ban; 87% of bar patrons say they enjoy visiting bars as much or more due to the ban; on average, bar patrons are staying longer at bars than prior to the smoking ban; and, support for the ban has almost doubled among smokers since it went into effect in 1998, increasing from 24% to 44 %. The survey provides strong evidence that the warnings that such smoking bans will hurt business, often uttered by the tobacco and hospitality industries, are based on smoke, not substance. For a press release from the California Department of Health Services, which includes a link to bar graph charts in pdf, click above; for a news story click here.


Dr. Glantz's Critique of Tobacco Industry-sponsored Economic Impact Studies

On August 23, 2000, Dr. Stanton Glantz of the University of California at San Francisco released this critique of recent studies by John Dunham of Philip Morris and Michael Marlow of California Polytechnic University which purport to demonstrate that smoke-free restaurant laws will hurt revenues for the hospitality industry. The critique by Dr. Glantz points out the many flaws in the papers written by Dunham and Marlow, and Glantz warns that these papers are almost certain to be used by the forces opposed to smoke-free environments laws. Glantz also points out that all scientifically credible studies show the revenues are not reduced by smoke-free laws, and, in most cases, they increase following passage of such laws.


Tourism & Hotel Revenues Before & After Passage of Smoke-Free Restaurant Ordinances.

This May 26, 1999 article in the Journal of the American Medical Association analyzed hotel revenues and tourism rates before and after passage of 100% smoke-free restaurant ordinances versus overall U.S. hotel revenues. The study found that smoke-free ordinances do not appear to adversely affect, and may increase, tourist business.


The Impact of Smoke-Free Restaurant Laws.

The entire January, 1999 issue of the Journal of Public Health Management & Practice was devoted to articles analyzing the impact of smoke-free restaurant laws. Six articles examine the effects of the New York City Smoke-Free Air Act on the city's hospitality industry. Three other articles describe findings on the impact of smoke-free laws passed in Massachusetts. Data from taxable sales receipts, surveys of consumers and restaurateurs, employment statistics, and complaint data presented in the articles showed the following: smoke-free restaurant laws do not cause adverse economic consequences; people support such laws; and restaurant owners are able to comply with relative ease to these laws. While these articles are not accessible online, copies of the full journal issue are available for $25 from the publisher by calling 1-800-638-8437.


The Effect of Ordinances Requiring Smoke-Free Restaurants & Bars on Revenues: A Follow-up.

This is a link to a pdf of the full text for this article in the October, 1997 issue of the American Journal of Public Health in which the authors examined sales tax data for 15 U.S. cities and counties which had passed smoke-free restaurant and/or bar ordinances. The results updated earlier data and found, as had the earlier study, that the smoke-free ordinances did not adversely affect restaurant or bar sales. Click the main title link above to access the article.


Environmental Tobacco Smoke Regulations Have Not Hurt Restaurant Sales in North Carolina

This article analyzed the economic impact of local ordinances in North Carolina -- obviously, a large tobacco-producing and using state -- which restricted smoking in restaurants. The analysis found that the implementation of stringent ETS regulations had no adverse economic impact on restaurant sales in the five North Carolina counties with the strongest ordinance.


Assessment of the Impact of a 100% Smoke-Free Ordinance on Restaurant Sales - West Lake Hills, Texas, 1992-1994.

This article reviewed the economic impact of a 100% smoke-free ordinance in West Lake Hills, Texas (a suburb of Austin) which was effective on June 1, 1993 and which required 100% smoke-free environments in all commercial establishments to which the public has access, including all restaurants and restaurants with bar areas. The report analyzed sales data before and after implementation of the smoke-free law and found that total sales in the restaurants did not decrease after implementation of the law. These findings, the editorial to the article notes, are consistent with similar findings in other locations which have adopted smoke-free restaurant ordinances.



Allowing smoking in the workplace has a number of hidden - and not so hidden - costs to the employer associated with it. Among these costs are: higher medical insurance premiums; more worker's compensation claims; lost worker time and productivity due to smoking breaks; absenteeism due to tobacco-related illnesses; smoking-related fires; etc. Further, as described in other sections of this web site, there are many legal liability issues for employers which are directly related to smoking in the workplace. Many of these costs - and liability issues - can be avoided or mitigated by the adoption of smoke-free policies. The following are links to articles which discuss these issues.

Economic Effects of Environmental Tobacco Smoke

This major new study of the above title was released in August, 2005 by the Society of Actuaries. The study was authored by Donald Behan, Michael Eriksen and Yijia Lin. It states environmental tobacco smoke (ETS) has been shown to be associated with increases in rates of cancer, morbid conditions of the respiratory and cardiovascular system and increases in the rates of spontaneous abortion and perinatal mortality. The authors combine exposure data, data on increased morbidity and medical and indirect cost data, all derived from published reports, to estimate the total economic cost of ETS exposure in the United States. Total annual costs for conditions with well-documented increases in morbidity, excluding economic losses related to pregnancy and the newborn, are estimated at over $5 billion in direct medical costs and over $5 billion in indirect costs. To access the full 94-page study, in pdf format, click above.


Report: The Economic Impact of Secondhand Smoke on the Health of Residents, and Employee Smoking Business Costs in Marion County, Indiana in the year 2000

The above report is dated February, 2002 and was issued on May 30, 2002. The study estimated the health costs of secondhand smoke exposure to residents of Marion County, Indiana and the economic impact of employee smoking on businesses in Marion County. Combined, the costs of health care and the costs of premature loss of life for diseases attributed to secondhand smoke in Marion County were estimated to be at least $56.2 million in the year 2000. To access the full 36 page report, in pdf format, click above.


Smoking Among Healthy Young Adults is Associated with Increased Hospitalisations & Lost Workdays

A study published in the December, 2000 issue of Tobacco Control journal titled "Short Term Effects of Cigarette Smoking on Hospitalisation and Associated Lost Workdays in a Young Healthy Population" found that "current cigarette smoking accounted for substantial fractions of hospitalisations and lost workdays, particularly among men." This study, which analyzed health data for almost 88,000 young men and women in the U.S. Army between 1987 and 1998, found that, "among men, current smoking was associated with a 30% increase in risk of being hospitalised for causes other than injury, and, among women, current smokers had a 25% increased risk of hospitalisation for conditions not related to injury or pregnancy." The study also found that "current smoking was associated with a 60% increase in risk of lost workdays among men and a 15% increase in risk of lost workdays among women." As a result, the rate ratios for hospitalisations and lost workdays attributable to current smoking (i.e., population attributable fraction or PAF) were 7.5% for men and 5.0% for women for hospitalisations, and 14.1% for men and 3.0% for women for lost workdays. Further, the study authors suggest that these PAFs may be underestimates. These findings provide strong evidence of the value of having workers who are not smokers and of encouraging current smokers to quit by having no smoking policies and providing easy access to nicotine addiction treatment resources. The authors state, "all other factors being equal, if the entire active duty U.S. Army population became never smokers, the number of lost days not related to injury among men might drop by as much as 18.3% in under 2 1/2 years." Click above for full study.


Workplace Smoking: Trends, Issues & Strategies

This link to a Canadian report titled "Workplace Smoking: Trends, Issues & Strategies" provides extensive information about smoking and smoking policies in the workplace, including: data on differences in smoking rates in small versus large companies; the impact of smoking restrictions; the economics of workplace smoking restrictions; and more.


Canadian Board reports Smokers Cost Employers more than $2400 a Year: Link to full report

A news article on January 17, 2001 reported that, according to a recent Conference Board of Canada study, the average smoking employee costs an employer more than $2,400 a year in lost productivity. Smokers call in sick about two more days a year than non-smokers. On average, they cost company drug plans twice as much as non-smokers. It costs employers money to create ventilated designated smoking areas for them. But the biggest drain on the bottom line comes from those little cigarette breaks. At the rate of 30 minutes a day, the average smoking employee racks up a whopping 18 days a year in time-outs for smokes. What can employers do? The Conference Board suggests they can improve their bottom line by offering employees a smoking cessation program. Such programs take many forms. The Lung Association of Nova Scotia's successful Quit 4 Good program costs $150 per employee. The investment is well worth the return, the Board says. In fact, Cancer Care Nova Scotia, in a recent report, documented that for every dollar an employer spent on a cessation program, they would get a $4 return. A cessation program might include coverage for smoking cessation drugs in the employee health benefits package, an in-house educational program or behavior modification program, partial or full compensation for participation in an external program, contests, challenges or other incentives. News article is no longer available online. Click above for link to full report.


Costs of Employee Smoking in the Workplace in Scotland.

This is a link to the abstract of a May, 2000 article in Tobacco Control Journal which examined the costs of smoking in the workplace, and the potential cost savings to the employer if smoke-free policies and/or smoking cessation programs were instituted.


Smoking Breaks by Employees Average 39 Minutes Daily in Michigan.

A February, 2000 survey in Michigan found that the average employee who smokes takes three smoking breaks each workday averaging 13 minutes for each break. If these employees are paid an average of $13 an hour, Michigan employers spend about $1.7 billion annually on employee smoke breaks, according to this Detroit Free Press report.


Smoke-Free Environments Law Project
The Center for Social Gerontology
2307 Shelby Avenue
Ann Arbor, MI 48103
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