Do you have money to burn? If you smoke cigarettes, then apparently you do. That’s because smoking is not only an unhealthy habit, it’s an expensive one as well – for the individual smoker, his family, his business, his community and the nation’s economy. In fact, the actual costs of tobacco addiction when added up reach far beyond the price of that pack of smokes sitting in your front pocket or tucked away in your purse. The numbers are actually frightening, reaching into the hundreds of thousands of dollars over a smoker’s lifetime.
The good news for you if you are a smoker is that you can save all those wasted dollars, too, but first you’ve got to quit. We’d like to help. Below, we take a look at the real facts and figures regarding the financial toll of cigarette smoking, other forms of tobacco products (like chewing tobacco and snuff) and tobacco alternatives (like vaping). We’ll also touch on the non-financial costs of smoking addiction, in case you’ve forgotten them. Finally, we’ve included a compelling interview with John Dicey, the Global CEO of Allen Carr’s Easyway, discussing the true costs of smoking and what smokers can do to free themselves of their dangerous and expensive addictions.
Cost of Smoking Addiction: The Big Picture
As of 2018, there were an estimated nearly 38 million adult smokers in the United States, of which more than 16 million were suffering from some form of smoking-related disease, according to the Federal Government’s Centers for Disease Control and Prevention (CDC). That’s a lot of smokers spending a lot of their hard-earned cash on cigarettes. But smoking is costing the nation as a whole a staggering amount of money as well. In fact, the price tag of smoking for the entire U.S. economy totals well north of $300 billion a year in direct medical care for adults ($170 billion) and lost productivity resulting from premature death and exposure to secondhand smoke ($156 billion).
That’s the big picture price for smoking addiction. But how do those numbers break down for the individual smoking addict?
Cost of Smoking Addiction: The Individual
Here’s a big myth: The financial toll of smoking addiction for the individual smoker equals the amount of money he or she spends on cigarettes. To most people, this statement is absurd on its face, yet many smokers never look beyond the immediate price of their daily fix. Who’s kidding who, here? Of course the financial costs associated with smoking go way beyond that. The price of a pack of cigarettes is, unfortunately, just the start.
Buying Cigarettes: The Daily Dollars
The first thing to know is that what you pay depends on where you are. State and federal taxes are to blame for the huge differences in cigarette prices from state to state. As of this writing, the state with the lowest average price per pack is Missouri ($4.38) and the state with the highest average price is New York ($10.45). The average U.S. price for a pack of cigarettes – again, as of this writing – is around $6.00 per pack. We’ll use that price and will assume a 15 cigarette-per-day habit for the following cost figures:
- Per day: $4.50
- Per week: $31.50
- Per month (31 days): $139.50
- Per year: $1,642.50
- Over 10 years: $16,425.00
- Over 40 years: $65,000.00
One more very important consideration: The price of cigarettes is always growing, and at a substantially faster rate than prices overall (5.52% for cigarettes vs. 2.02% overall from 2000 to 2019), which means that with each passing day cigarettes are taking a bigger and bigger relative chunk of a smoker’s income. Regardless, depending on one’s income – and level of addiction – these figures may or may not seem substantial. Many smokers may even think the price of cigarettes is more than worth it, given the pleasure they derive – or, more correctly, think they derive – from lighting up. One thing is certain, though. The figures do not represent the total financial toll of a smoker’s habit. Not even close.
Medical Costs and Lost Productivity
When talking about the financial toll of smoking addiction for the individual smoker, this is where the real money comes in. The price of cigarettes themselves is peanuts compared to the costs associated with healthcare and lost worker productivity. The personal website Wallet Hub recently released a comprehensive study providing figures for the real cost of smoking, broken down by state (and including the District of Columbia), and covering such topics as healthcare costs, income and financial opportunity losses, and the out-of-pocket costs for buying cigarettes. Total figures are given for a single year and for a lifetime of smoking (51 years). We’ve picked out three states – Georgia (least negative financial impact), Texas (26th lowest financial impact), and Connecticut (greatest financial impact) – to give you an idea of what they found:
Bear in mind that the above figures represent the financial toll of smoking for the individual smoker in each of the states, which begs the question: What could you do with an extra million dollars or two? Or three?
Smoking and Income
If you’re a smoker, here’s another angle on how your habit is hitting your wallet: According to a working paper from the Federal Reserve Bank of Atlanta, on average, smokers earn approximately 20% less income than nonsmokers. As for drawing a direct correlation with smoking, it gets a little tricky. The lower wages earned may just be the result of other issues or personal qualities smokers bring or fail to bring to their jobs, in comparison to nonsmokers. For example, nonsmokers are more likely to have attained a higher level of education than smokers, resulting in higher pay.
One very interesting finding of noted in the paper: The amount of cigarette consumption – whether it’s one cigarette a day or one pack a day – doesn’t appear to make a difference. It is simply the fact that the individual is a smoker that correlates with a lower wage level.
Smoking and Insurance
Insurance costs are another expense that packs an additional punch for smokers. For insurance companies, it’s all about the bottom line, and the bottom line in terms smokers is that they’re a substantially higher risk for payouts than nonsmokers. That’s why when you apply for any number of types of insurance, you’re certain to see this question on the application form: “Do you smoke?”
If you didn’t know already, health insurance companies can and do charge smokers more than nonsmokers for their coverage, even under the Affordable Care Act (ACA). The ACA permits insurers to charge up to 50% more on their premiums to smokers on small employer group and individual policies. States have the option to reduce or eliminate these higher rates for their residents, and some do. But most allow for the full 50% surcharge. With monthly premiums for individuals currently averaging in the $500-a-month range, that means smokers are literally paying thousands of dollars more a year for their coverage. What about those insurance subsidies under the ACA? Smokers get no break there. They pay the entire cost of the smoker surcharge.
By the way, if you’re one of those smokers paying higher insurance premiums because of your habit, there is some good news. Most private healthcare plans and all plans purchased through the ACA Marketplace currently cover some level of tobacco cessation treatment. The same is true for those insured through Medicare and Medicaid. One more excellent reason to quit.
First of all, can smokers even get life insurance? The answer is yes, although not all insurers will write policies for smokers. And the ones that do are going to charge you a whole lot more for your coverage. How much more? Prepare for sticker shock. Smokers in their 30’s can expect to pay 100% to 200% or more for the same amount of coverage as their nonsmoking counterparts. And smokers in their 40’s will likely to pay premiums that are as much as 300% higher than nonsmokers. Here’s an example from the nonprofit organization Life Happens: For a $500,000 20-year term life insurance policy, a 45-year-old male nonsmoker can expect to pay a monthly premium of $52. That same monthly premium for a 45-year-old male smoker? $289.
According to a National Fire Protection Association report, between 2012 and 2016, 5% of all home structure fires were started by smoking materials, and resulted in nearly one-quarter of home fire deaths and 10% of home fire injuries. It’s no wonder then that insurers charge smokers more for their homeowners’ policies, as much as 20% more by some expert estimations. As for auto insurance, most insurers do not ask whether a customer is a smoker or not, but some do. And the ones that do are likely to charge smokers a higher rate, an average of 5% higher, in fact.
Financial Toll of Smokeless Tobacco Products
Smoking isn’t the only way tobacco is consumed. There are also smokeless tobacco products, like chewing tobacco and snuff. As with cigarettes, a smokeless tobacco habit is hard on a user’s bank account. And, like cigarettes, the direct costs of these products are ever-increasing. Currently, a can of dip can run anywhere from around $2.50 to $8.00 depending on the state the buyer is in. That means a user purchasing one can a day at $5.00 per can is forking out $1,000 a year simply to feed his/her habit. That’s a total of $40,000 over a 40-year period. Chewing tobacco in a pouch (3 oz.) is currently selling for around $9.00, which means that someone with a one-pouch-a-day habit is spending nearly $3,300 a year, or more than $130,000 over four decades.
Believe it or not, even today many people still believe that they can avoid the health dangers of smoking cigarettes by using non-smoked forms of tobacco. They are, of course, sadly and sometimes tragically mistaken. According to the American Lung Association, for example, smokeless tobacco contains a minimum of 28 cancer-causing chemicals, and its use is linked to a string of cancer types including those of the pancreas, esophagus, and mouth. Other harmful effects include tooth decay, tooth loss, and gum disease. Using smokeless tobacco during pregnancy can also lead to early delivery and stillbirth. Finally, smokeless tobacco use increases the risk of high blood pressure, heart attack and stroke.
One more thing: Smokeless tobacco contains nicotine, just like cigarettes. Consider the following facts: Holding a typical amount of dip in the mouth for thirty minutes provides a user with the same amount of nicotine that a smoker consumes with three cigarettes. And a person with a two-can-a-week dip habit is consuming the same amount of nicotine as a pack-and-a-half-a-day smoker. So, while specific figures may be hard to come by, you can be sure that the financial toll of smokeless tobacco – when taking into account the costs associated with user health (medical care, insurance costs, productivity loss, disease and death) – far exceeds the price of that can of dip or pouch of chew.
Financial Toll of Vaping
Vaping, if you don’t know by now, is the act of inhaling a nicotine-infused vapor, most commonly by way of an e-cigarette or vape pen. Vaping (also known as JUULing) has quickly become a popular activity among young persons, especially teenagers. It is still a relatively new phenomenon, and because of that there’s a lot we don’t know about its effects on both a user’s health and finances. Nevertheless, some facts and figures on vaping are starting to filter in:
- According to the most recent numbers from the National Institute on Drug Abuse (NIDA), in 2017, almost 28% of high school seniors reported vaping in the past year. That’s up from 10% in 2010. Over 13% of 8th graders and nearly 24% of 10th graders also reported vaping in 2017.
- The direct costs associated with vaping appear to be significantly less than those associated with smoking tobacco cigarettes, but are still substantial. Vaping merchants and industry groups readily point this out using their own statistics. Possibly more reliable, though, are these figures from The Journal of Nurse Practitioners:
- Annual cost for purchasing tobacco cigarettes for a one-pack-a-day smoker ($7.26 per pack): $2,650.
- Annual cost for comparable disposable e-cigarette user (one can = two packs of tobacco cigarettes): $1,325.
- Annual cost for comparable rechargeable e-cigarette user (including cost of device; 30 ml vial = 15 packs of tobacco cigarettes): $530-$680.
While many experts will argue that vaping is less harmful than smoking real tobacco cigarettes (which may be true), don’t be lulled into thinking that means it’s harmless. It’s not. First of all, the vapor inhaled contains nicotine, which is a highly-addictive drug. Additionally, a recent study cited by the NIDA concluded that when a person uses flavored vaping products, they’re inhaling potentially harmful toxins such as acrylonitrile (used in the production of adhesives and plastics), acrylamide (used in treating sewage and may increase the risk of cancer), crotonaldehyde (a poisonous and highly flammable liquid), and propylene oxide (which can irritate the respiratory tract and depress the central nervous system). Remember, with harming your body comes higher healthcare and other costs.
Possibly more telling when it comes to the costs of vaping is that teen e-cigarette users are much more likely (31%) to start smoking tobacco products (cigarettes, cigars, hookahs) than non-users (8%). And if you’ve been paying attention to the other information in this article, you know the tremendous costs that come with smoking tobacco.
Financial Toll of Secondhand Smoke
Smokers aren’t the only ones paying a financial price for their bad habits. There’s also the issue of secondhand smoke. Secondhand smoke refers to both the smoke that comes from the ends of burning cigarettes and the smoke that is exhaled by smokers. Secondhand smoke is a much bigger problem than you probably think it is. The CDC reports that secondhand smoke:
- Contains over 7,000 chemicals, hundreds of which are toxic, and approximately 70 of which can cause cancer.
- Is responsible for a 25% to 30% increase for nonsmokers developing heart disease, leading to over 30,000 premature deaths in the U.S. annually.
- Causes a 20% to 30% increased risk of stroke in nonsmokers, resulting in more than 8,000 U.S. deaths per year.
- Causes a 20% to 30% increase in the risk of nonsmokers developing lung cancer, resulting in over 7,300 lung cancer deaths in the U.S. each year.
- Leads to a wide range of health problems in infants and children (like respiratory and ear infections), more frequent and severe asthma attacks, and even sudden infant death syndrome (SIDS).
Again, it’s important to note that these are health problems suffered by nonsmokers who are simply exposed to smoke coming from the cigarettes of others.
So, what’s the total financial cost of all of this? Numbers for individuals are lacking. However, there are several studies that offer figures for the costs to businesses and the health care system as a whole:
- According to the Congressionally-sponsored CDC Foundation, the loss of worker productivity due to secondhand smoke exposure is estimated to cost U.S. businesses $5.6 billion a year.
- The Society of Actuaries estimates that secondhand smoke costs the entire U.S. economy about $10 billion a year: $4.6 billion in lost wages, and another $5 billion in healthcare costs.
- The Campaign for Tobacco-Free Kids puts annual healthcare expenditures due solely to secondhand smoke exposure at over $6 billion.
Smoking and Taxes
It’s no great secret that a major portion of the prices users pay for their cigarettes and other tobacco-related products are the result of taxes imposed by the federal and state governments on those products. These include sales taxes, duty taxes, value-added taxes, and excise taxes. Of particular note are excise taxes, which can be pretty steep. For example, the federal tax on cigarettes currently rests at $1.01 per pack. State taxes on cigarettes, as of October 2018, average out at and additional $1.78 per pack. Actual tax amounts varying wildly from state to state, with the lowest at $0.17 per pack in Missouri and the highest at $4.35 per pack in New York (as of January 2018). The moneys collected from these excise taxes are commonly used to fund such things as cancer research and tobacco use prevention and cessation programs. There’s another positive effect from all of these taxes: The higher prices paid for cigarettes and other tobacco products result in decreases in their use. It’s simple economics: When prices go up, purchases go down.
Excise taxes on the sale of tobacco-related products are one thing, but what about the effects of smoking addiction on taxes in general? The answer may shock you. The Campaign for Tobacco-Free Kids reports the annual (combined federal and state) tax burden from smoking-caused government spending to be $936 per U.S. household. So, where does all that tax money go? Here are a few figures from the same report:
- $39.6 billion annually in government smoking-related Medicaid payments ($22.6 billion Federal, $17.0 billion state).
- $45.0 billion annually for smoking-caused Medicare Federal expenditures.
- $23.8 in Federal funds for other tobacco-related healthcare costs (like VA healthcare).
Financial Impact of Smoking Addiction in the Workplace
Smoking addiction is a major expense for private businesses as well – big ones and small ones alike – the result, (as you might expect) of a combination of lost employee productivity and additional direct medical costs. Want some numbers?
- The annual excess cost to a business to employ a smoker was estimated in 2012 to be almost $6,000, taking into account issues related to absenteeism, smoking breaks, pension benefits and healthcare costs. Adjusted for inflation, that amount would be around $7,000 today.
- Small businesses (with five smokers) incur an additional $30,000 per year in costs due to their smoking employees.
- Large businesses (with 100 smokers) incur an additional $600,000 per year in costs as a result of their employees who smoke.
These figures, of course, don’t stop with the business owners themselves. Like all other business expenses, they’re passed on to the consumer in the form of higher prices. So, who is really paying? You are.
Where Your Smoking Dollars Go: The Secret Financial Toll of Smoking Addiction
Ever wonder where all of that hard-earned cash you spend on cigarettes goes? The CDC has numbers on that, too, and they prove one thing with certainty: The tobacco industry uses billions of dollars of it each year on promotions and advertising. How much, you ask?
- In 2016, cigarette companies spent $8.7 billion on cigarette advertising and promotional expenses in the U.S. alone, and an additional $759 million on advertising and promotions for its smokeless tobacco products.
All that spending amounts to around:
- $26 million per day
- $250 per year for every adult smoker in the U.S.
- $29 per year for every man, woman, and child in the U.S.
Here’s what’s worse: A whole lot of the ads and promotions put out by tobacco companies are hooking our kids. While the industry denies that they target children with their research and marketing, their actions appear to contradict their claims. According to the Campaign for Tobacco-Free Kids, for example, internal industry documents indicate that tobacco companies have conducted numerous studies aimed at understanding the smoking habits of kids, and have developed marketing and products directed squarely at them. Other questionable practices have included the development and marketing of flavored products, and the practice of heavily advertising at retail outlets near playgrounds and schools.
Here’s the point: The money spent on cigarettes doesn’t just damage the smoker’s finances, it hurts many others as well. Including children.
And Finally, As If You Didn’t Need to Be Reminded…
Smoking is bad for your health. Really bad. Is there anyone out there today that would seriously argue the point? Even among smokers, that’s doubtful. And pretty much everyone knows why it’s bad for you, too. If you need reminding, consider this from the Centers for Disease Control and Prevention (CDC):
Cigarette smoking remains the leading cause of preventable disease and death in the United States, accounting for more than 480,000 deaths every year, or about 1 in five deaths
Yet, as of 2017, 14% of Americans 18 years or older were smokers. There is some good news, though. According to the same CDC study cited above, smoking has declined significantly since 2005 when nearly 21% of the U.S. adult population smoked. That’s a serious improvement. However, given what we know about the tremendous dangers of smoking addiction to our health – and pocketbooks – 14% is still 14% too many. So, if you’re a smoker, maybe it’s not such a bad thing to be reminded why you need to stop.
Interview with Expert John Dicey
John Dicey is the Global CEO & Senior Therapist of Allen Carr’s Easyway, whose in-person seminars (in more than 50 countries worldwide) and online programs help over 50,000 individuals each year to stop smoking. Since joining Allen Carr’s Easyway in 1998, John has treated more than 30,000 smokers face-to-face, and now oversees every aspect of the company’s live seminar, ongoing traditional publishing, and digital product development programs from his base in London, England.