Tobacco: Moral hazard and the hazard of morals

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A range of products are available in the market as a safer alternative to cigarettes, but are these products actually luring youngsters into smoking?

Tobacco: Moral hazard and the hazard of morals
Since the late 1960s, tobacco firms have marketed low-tar or “light” cigarettes as being less harmful. Indeed, laboratory tests proved as much, leading government agencies to encourage smokers to switch to these new, allegedly “safer” products. Unfortunately, these tests by machines simulated smoking and monitored the intake of nicotine and tar but did not account for the behaviour of actual smokers.

When a smoker smoked a light cigarette, he simply compensated by taking a deeper draw, meaning that smokers of light cigarettes were at equal risk as those smoking higher-yield products. As a result, many countries now prohibit marketing light cigarettes as being less harmful, or even implying so by calling products “light.” And, as a consequence of this history, regulators, and perhaps even tobacco companies themselves, are a little gun-shy of harm reduction claims being made.

Most will agree fewer cigarettes being consumed benefit the health of the population as a whole. But, to get there, total bans or making cigarettes illegal is an unlikely path. Most governments have imposed hefty cigarette taxes and reduced places where cigarettes can be consumed. In many countries the number of smokers has fallen, as have the number of cigarettes consumed per smoker.

Nowadays, however, there is reasonable evidence to suggest there are products, some similar to cigarettes and some quite different, some tobacco-based and some not, that may appeal to smokers and are demonstrably less harmful than cigarettes. And, it is likely that if smokers would shift their nicotine consumption to them, the world would be a healthier place.

Undoubtedly, the experience with light cigarettes casts a shadow over the “new, less-harmful” products. And, they pose different dilemmas for tobacco companies and the anti-tobacco organisations that campaign against the sale of tobacco and nicotine-containing products.

The primary issue facing tobacco companies is: do they position these products to smokers as a way to stop smoking while continuing to consume nicotine or as a replacement to cigarettes entirely? In essence, are these products complementary to cigarettes or a substitute to them? Obviously, positioning them as a complement might benefit the core business. Yet, from a marketing perspective, positioning a new product as more-or-less an inferior alternative to cigarettes to be consumed whenever one can’t have what one really wants, will hardly lead to a successful product launch.

Many anti-smoking and anti-tobacco organisations have spr­ung up since the “light” cigarette debacle. Potentially reducing harm but continuing to feed a nicotine addiction is an unwelcome outcome for anti-tobacco campaigners. They would rather people quit smoking than prolong smoking with the aid of a complement. In addition, they worry that additional nicotine products being on the market could be a route young people, or heretofore non-smokers, would take to becoming smokers. And, they worry that these reduced-harm products might be consumed with reckless abandon, making them potentially more harmful than cigarettes. After all, “reduced harm” is a long way from “safe.”

What do we fear more? The moral hazard or the hazard of morals? We could experience moral hazard in two ways: Smokers might feel lower risk is cause to increasing consumption of reduced-harm products, thereby off-setting much of the potential societal benefit or non-smokers might start consuming lower-harm products. Alternatively, do we fear more the hazard of morals? That is, perhaps a moralistic approach to cigarette cessation, looking to smokers to quit smoking while prohibiting attractive alternatives being put on the market, might lead to fewer smokers quitting cigarettes.

Reduced-harm products will do well for society if smokers switch to them and consequently reduce or cease their cigarette consumption. Unfortunately, their behaviour with reduced-harm products might change, as it did with light cigarettes, reducing the potential benefit. For reduced-harm products to succeed they need to be marketed in an attractive way to smokers, and if they are attractive to smokers, they may also be attractive to non-smokers. In brief, the trade-off between moral hazard and the hazard of morals leads us to looking at the potential benefit to smokers and the potential harm to current non-smokers.

(The author is a professor of marketing at IMD, Switzerland)

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