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December 21, 2012 11:00 AM The External Cost of Guns v. Smoking

By Don Taylor

A quick post on the cost of smoking v. cost of guns, given the intuitive notion that second hand smoke and violence might be (conceptually) similar. I am not an expert on guns, and this is a quick post, given as food for thought.

I have done work on the social cost of cigarette smoking, and we estimated the cost per pack in to be ~$40 (in year 2000 dollars):

  • $33/pack was private costs, mostly borne by the smoker through shortened life
  • $5.50/pack was quasi-external costs, borne mostly by the spouse through shortened life via second hand smoke (and smaller amounts for children, who are exposed for shorter periods)
  • $1.50 of external costs net of excise taxes which is the summation (positive and negative) of many sources: third party health insurance, Social Security, private life insurance markets, etc.

My colleague at Duke Phil Cook (along with Jens Ludwig at Chicago) have done work on the cost of gun ownership, and estimated what they call the social cost of a an additional household acquiring 1 gun to range from

  • $100-$1,800/year per gun

Note that they use the term social cost, but I understand what they have done to focus on external costs only. Key to their sensitivity analysis is whether and how you value fear, worry, etc. related to gun violence, which has certainly been heightened this past week. If you include that, you get to the high end, and if not nearer the low end (there are other things going on in the sensitivity analysis, including findings from the literature that the value of life years lost of those most typically killed with guns is lower than the average death, controlling for age).

A few points about Cook and Ludwig’s analysis.

  • framed against the smoking work above, Cook and Ludwig focus on external costs as I say. This misses the internal costs associated with suicide, or quasi-external costs if a gun is used by a family member for suicide. As we conceptualized smoking, domestic violence homicide would also be a quasi-external cost, which I don’t think could be teased out from what they did. I am sure there are some complicated factors of attempted v. completed suicide, and the choice of method is endogenous, etc.
  • They use percentage of suicides via a gun in a county as a baseline proxy for gun ownership, and look at changes in gun ownership and changes in murder; they are assigning the cost of an additional household becoming a gun owning household
  • They find that increased gun prevalence increases murder, but not other violent crimes (more guns add lethality)
  • The larger estimates above include gun injuries, which have larger social costs than deaths given how the literature values lost life years due to gun homicide [see Viscusi 1998 on this issue]
  • Murders among persons age 15-19 are more sensitive to increased gun supply, which they surmise increases illegal guns (for example, bought by gangs on the streets)

Summing up, the external costs of smoking for a 2 pack per day smoking in would be ~$1,000 (in year 2000 dollars; 365x2x$1.50/pack external cost), near the midpoint for the estimate of external costs of a marginal gun that Cook and Ludwig identify. In smoking, the private costs overwhelm via the value of shortened life, and in gun deaths lost life is also the major cost. Smoking is the leading preventable cause of death in the U.S., and results in ~ 10 times more death annually than do firearms (435,000 v. 30,000 in year 2000) so the costs of smoking would be expected to be much larger than the cost of guns, with the magnitude of this calculation being sensitive to how one values lost years of life.

You could think about how to convert the cost per pack and the cost of an additional gun per year to try and estimate the optimal amount for a gun buy back program, or similarly, the amount society should be willing to pay a smoker to quit, but I am not going to do it now.

[Cross-posted at The Reality-based Community]

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Don Taylor is an associate professor of public policy at Duke University, where his teaching and research focuses on health policy.
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