Bonds can help the government quit an oppressive habit (Smoking)

Bonds can help the government quit an oppressive habit (Smoking)
By Tim Harford
Published: February 18 2006 02:00 | Last updated: February 18 2006 02:00. Copyright by the Financial Times

Never too eager to lead from the front, this week British parliamentarians followed Ireland, Spain, Italy, New York and California as they voted to introduce a ban on smoking in bars, restaurants and offices - so-called "public spaces". (Those people who really believe offices and restaurants are public spaces might try organising a Boy Scout jamboree in one.)

The decision, of course, owes much to the fact that defending the right to smoke is politically as appealing as defending the right to pick your nose. Whether the new law is sensible is another matter.

It is easy to conjure up justifications for a smoking ban but harder to make them stand up to scrutiny. The most popular argument recently has been that smoking must be banned in public spaces because passive smoking can be dangerous. Bar staff or customers exposed to smoke from other people's cigarettes are running a health risk.

That is true, but customers are well aware of the risks of passive smoking, as well as the stench, and can always take their money to a less smoky environment. Staff are also free to work where they please, at least since Britain outlawed slavery back in 1833. If customers really are clamouring for smoke-free places to relax and chat with friends, we should see an ample supply of them provided by some entrepreneurial company. We do, and the company is called Starbucks.

Many pubs cater profitably to smokers because there are plenty of smokers keen to pay, many non-smokers not concerned enough to look elsewhere, and bar staff who are happy to be paid to take the risks of the job. The government has no more business interfering with the pleasures of these consenting adults than it has imposing a dress code in nightclubs - not even if such a dress code might improve the typical club-goer's experience. Nightclub owners can be the judge of that, and their customers will let them know quickly whether they have made the right call.

An alternative argument is that smokers are a drain on publicly funded or subsidised health systems, and this justifies measures to discourage smoking. Unfortunately, the sums do not add up. Life is, it turns out, 100 per cent fatal and Alzheimer's disease is a lot more expensive than a quick coronary arrest. Anyone misguided enough to believe that individual welfare should be subordinated to the bottom line of the National Health Service should be arguing for a cigarette subsidy.

The final justification for the smoking ban is that it will help smokers to quit. Well, that is also true, but not all smokers wish to quit. Pile on enough humiliation and inconvenience and we can persuade most smokers to give up in disgust, but not all of them will thank us. The next stage in the process will be to make every smoker wear a collar and a cow bell, so that non-smokers can avoid them in the street.

No one can deny that smoking is a dangerous habit and that many smokers are tormented by their addiction and dearly wish to stop. The nannying impulse of the government is therefore understandable. But there is a better way for the government to help those smokers who want to quit, without oppressing those who do not.

It is time for a bit of policy entrepreneurship. Why not try something that has not been attempted elsewhere instead of aping the Californians or the Irish?

Here are the pieces of the puzzle: a government desperate to flex its muscles to restrain wayward nicotine-addled citizens, millions of smokers desperate for someone to be firm with them and a huge public-sector borrowing requirement.

My proposal is simplicity itself. Any smoker who wants to quit can call a government hotline or log on to a website and buy "Quitter's Bonds". They will be available in denominations to suit any budget.

Quitter's Bonds will be financial assets like Treasury bills or premium bonds, but they will have an unusual feature. They will pay no interest and will not be redeemable except by the original purchaser. In order to cash in her Quitter's Bonds she will have to pass a year of random blood tests to demonstrate that she has stubbed out the habit. Until then, the money is an interest-free loan to a hard-hearted government with unlimited reserves of moral superiority.

Quitter's Bonds have an honourable pedigree, in the Christmas Clubs popular with American families in the 1970s. Customers would give their money, interest free, to banks. In exchange, banks would refuse to allow them to take it out until the beginning of December. Coercive, yes - but the coercion is voluntary. Anyone who preferred to save for Christmas in his own way could open a conventional bank account.

In spite of the sometime popularity of Christmas Clubs, I am not convinced that Quitter's Bonds will have many takers, but that is perhaps the point: it is up to each smoker to decide if he would like the government to help force him to quit.

There is an added bonus. Since smokers tend to die young, there is a good chance that many Quitter's Bonds will never be redeemed for cash. In troubled times, what could be better for the public finances?

The writer is the FT's 'Dear Economist' and author of the new book The Undercover Economist