Francisco de Paula Santander
con Colegio de Profesionales en Ciencias Económicas
de Costa Rica
con Colegio de Economistas de Lima
de Comercio Exterior (CRECEX)
Costarricense de Restaurantes y Afines
Costarricense de Hoteles
de Industria y Comercio Costa Rica - México
SMOKE AMONG UNIVERSITY STUDENTS:EXTERNAL
COSTS OF A HARMFUL HABIT
Gabriel Leandro, MBA
The different activities
that people and enterprises carry out imply several private
costs and in some cases external costs thus private costs
and social costs are not always equal. An example of such
situation can be a cement manufacturer located near a
residential area. In this case the private costs imply
work force, materials, depreciation, rent, etc. This manufacturer
aims to increase his benefits, when his marginal-revenue
equals his marginal private cost but this decision may
not be economically efficient if the external costs or
externalities that this activity causes to other people
and firms are not taken into consideration.
An externality is defined
as the effect of economic activities of one party to another
party, that the price system does not consider (Nicholson).
Externalities occur when private costs and social costs
are not equal. Externalities can be either positive or
negative. In this way, the cement manufacturer for example
when he does not take into account all the pollution resulting
from his activity and how it affects the near areas or
other near manufacturers, he is creating a situation in
which the social cost is greater than the private cost.
In the graph, we can
observe the marginal private cost. Under the supposition
that the manufacturer participates in a competitive market,
he would produce the amount Qo (of cement) per unit of
time, because that is the point where he increases the
profits, but at such level of production we can clearly
observe that the marginal cost is higher as a consequence
of the cost that implies pollution. At the level of production
Qo the external cost is represented by the distance from
A to B.
In this example of the
manufacturer of cement, the problem basically consists
in how to achieve the best use of the air, which represents
a resource that lacks of property rights (perceiving this
right as the legal one that determines who owns a good
and how that good is used) because nobody owns the air.
To many the solution
should be to eliminate pollution completely which would
probably imply to close this cement industry. However,
this would not be the best solution because the same houses
that have been affected by this industry have been favoured
by it in the sense that they were built with the material
produced by it (cement). Therefore, it is not efficient
either to eliminate pollution completely but to find an
appropriate or acceptable level of pollution.
According to the last
graph, the cement producer maximizes his benefits in point
A, with the amount Qa of pollution where his marginal
profit is zero (in other words his marginal cost and his
marginal revenue are not equal) At this level of production,
the marginal social cost is represented by the distance
form A to B, resulting in an inefficient outcome because
the marginal social cost is greater than the marginal
profit. At the level of pollution Qe, the marginal social
cost and the marginal profit are equal therefore it would
be a level of efficient pollution.
For an outcome like
the previous one to have effect it is required any kind
of property right over air that encourages any agreement
between the neighbourhood and the factory which may indemnify
them for the pollution caused or provide any other solution.
However, such agreement would be possible to reach because
it implies huge costs. For this reason, governments set
regulations, pollution charges, permissions and taxes
which represent methods to achieve the outcome previously
explained if they are implemented in the right way.
SMOKING: A CASE
OF SIMILAR OR WORSE EXTERNAL COSTS THAN THE ONES OF THE
According data from
Caja Costarricense de Seguro Social, smoking causes 67%
of the cancer deaths, 50% of respiratory diseases, 15%
of the diseases of the circulation system and 10% of the
newborn deaths. In addition to the negative consequences
of smoking to the smoker, there are a number of external
costs related to discomfort, irritation, and damages to
the health of people around them, I mean the passive smokers.
passive smoking or involuntary smoking is considered the
main cause of premature death in the world. To The United
Nations Children’s Fund (UNICEF), the activities
of the tobacco industry could lead to a worldwide catastrophe
regarding health especially among children and women.
Tobacco represents a big treat to the rights of children
because it not only brings about diseases like asthma
and congenital defects but also due to it maybe parents
do not have enough money to pay the education of their
children and medical assistance since they spend money
in cigarettes. (Carol Bellamy, Executive Director of UNICEF).
According to a web page
of IAFA related to programs against smoking, in Costa
Rica the passive smoking is responsible for a number of
children diseases every year: 27000 cases of otitis, 46000
visits to clinics and hospitals due to cough, new 9 cases
of asthma, 10 asthma attacks, 11 cases of bronchitis and
pneumonia and 4 ear and tonsil surgery. This mean that
in Costa Rica around 100000 children examinations take
place per year due to the negative effects of adult smoking
on children in addition to 20 hospitalizations at a cost
of six hundred millions of colones per year.
According to the economic
theory and as it was explained in the example of the cement
manufacturer, smokers and non smokers are trying to use
the same good, air, which does not belong to any of them.
The discomfort that the smokers cause to non smokers is
an example of an externality therefore smokers should
be indemnified in some way or there should be some agreement
or regulation that avoid such situation. On that score,
there are some solutions.
- Private agreements:
due to the difficulty of setting property right over
air in addition to the reciprocal nature of the externalities
(to the smoker the non smoker represent a discomfort
too, because the non smokers prevent the smoker from
enjoying smoking) an agreement between them represents
a feasible solution in some cases mainly when a third
party establishes the agreement. For example, restaurants
have the smoking area and the non smoking area.
- Smoking prohibition:
the government as well as public institutions establish
norms to prohibit smoking in public areas or in the
- Taxes: to set
cigarette sales taxes increases their price. This
represent a substantial source of fiscal income
- Other: implementation
of programs against smoking.
In spite of all these
possible solutions it is very difficult to achieve that
smokers do not affect non smokers, in any way.
A big problem related
to smoking is the beginning of this precocious habit,
which is a strong tendency in Costa Rica during the last
years as well as a greater incidence of smoking in women.
According to the World Health Organization (WHO) from
1100 millions of smokers that exist in the world, 90%
started the habit before they were 19 years old. According
to Natalie Valdés and Sara Sánchez, advisors
of The Pan American Health Organization (PAHO), the number
of smoking women is increasing dramatically specially
among teenagers and in developing countries. Costa Rica
is not the exception. Nowadays it is very common to see
young people smoking at bars, academic institutions, among
others. This not only affects them but also affects their
classmates who even when they do not smoke they become
Some of the outcomes
of a study conducted in the Universidad Latinoamericana
de Ciencia y Tecnología ULACIT by Gineth Rivera,
Ricardo Cordero, Franklin Castro and Eduardo Zavala as
a project for a course in applied macroeconomics imparted
by their instructor Gabriel Leandro who also guided the
study, are explained below. From August 11th and 22nd,
2003 a random sample of 105 students from diverse majors
was selected, there was 95% certainty and an error rate
of 8%. The sample was constituted by 51.4% men and 48.6%
women. 32.4% of interviewed people were 20 years old or
younger, 52.4% were from 21 to 25 years old, the 7.6%
were from 26 to 30 years old and the last 7.7% were 31
years old or older. In addition some students from different
majors were excluded form the study. The data processing
was carried out with SPSS, which is a specialized software
for data processing in the field of social sciences.
From the study we concluded
that 41.9% of interviewed people smoked al least occasionally
and 29.5% at least once a week. Many considered themselves
social smokers, in other words they smoke with their friends
and classmates during parties or social gatherings. However
around 21 % admitted that they smoked daily and half of
them said that they consumed half package of cigarettes
or more per day.
An interesting outcome
is that there is a significant difference between smoking
habits of men and women, because 44% of interviewed men
said that they smoke occasionally while in the case of
women only 39% said that they smoked occasionally. The
following chart describes deeply this data, showing the
few differences between men and women. Most o the women
considered themselves social and occasional smokers.
half package or more
half package or less
At least once
a week but less than once a day
(approximately once a month)
On the other hand 83%
of interviewed people that smoked ever day was 25 years
old or younger, evidencing the tendency that smoking is
a frequent habit in young people to great extent. The
favourite places to smoke are: university 35% of the cases,
restaurants, bars, and parties 28%, home 22% and other
Certainly a great percentage
of students from ULACIT (and probably from all the universities)
smoke in the campus affecting the rest of their classmates.
Some of the r4esults of this study showed that 62% of
the non smokers feel highly affected by the students who
smoke while 38% is less affected or not affected at all.
According to the interviews
the majority of smokers are aware of the negative consequences
that hey bring about to the non smokers. When we asked
them to what extent they believed that the smoke affects
non smokers around them, from 0 to 5 considering 0 the
minimum and 5 the maximum, 53% answered 5, 79% answered
4 or 5 while 7% answered 2 or less.
Is there something
Yes, one of the more
interesting results of this study was that when we asked
the interviewed people if they would like to stop smoking
86% answered yes and 82% of them, who smoked every day
and 100% of the ones that smoked occasionally wanted to
stop smoking. In Addition 70% of interviewed people said
that they had tried to stop smoking at least once however
they failed and they continued smoking. 77% of smokers
were willing to receive voluntarily some kind of help
from the university to stop smoking. 98% of non smokers
agreed that the university could provide help to students
to stop smoking.
ULACIT is a well known
institution due to its good name, in addition it is an
organization highly interested in human promotion as well
as in promoting a greater quality life to its students
and to the country in general. Why couldn’t ULACIT
implement some program to help all these students to quit
this harmful habit?
The best part in that
students are willing to stop smoking and the university
may have some resources to achieve that goal. How to achieve
in the best way and at the less possible cost could be
the objective for another study however, it is not so
difficult. It would be important to prohibit smoking in
the lobbies and other areas and to restrict to great extent
the smoking areas but this is a partial solution because
they still can freely smoke out of the campus. Recently
ULACIT has been providing psychological assistance to
students which may represent another option by a similar
system the university could make groups and through conferences
and different techniques help smoking and non smoking
students to breathe cleaner air.
- Parkin, Michael. Microeconomía.
Versión para Latinoamérica. –
5ª. ed.- México: Pearson Education, 2001.
- Case, Karl E. Principios de microeconomía.
– 4ª. ed.- México: Prentice Hall
- Miller, Roger. Microeconomía
Moderna. - 7ª. ed. – México: Harla,
- Nicholson. Microeconomia Intermedia.
- 8ª. ed. – Bogotá: McGraw Hill,
- Valdés, Nathalie. Sánchez,
Sara. El tabaco y las adolescentes: tendencias actuales.
Washington D.C., Organización Panamericana
de la Salud, 1999.
- Azqueta, Diego. Valoración
económica de la calidad ambiental. Madrid:
McGraw Hill, 1994.
- Página de Internet Cruzada
en contra del fumado del IAFA: http://www.ccss.sa.cr/fumado/artic2.htm,
21 de agosto de 2003.