The Economic Losses of Smoking

Park, Jong Ku; Lee, Kyu Sik

Abstract

The purpose of this study was to identify and measure the economic costs and benefits due to smoking in Korea. Cigarette smoking is a major cause of morbidity and mortality. In addition to the health risks of smoking, there are important economic consequences. A complete assessment of the economics of smoking requires evaluation of various health, economic, and intangible parameters, including benefits as well as costs of both the production and consumption of tobacco. In this article we focus on costs resulting from the health effects of smoking (expenditures for medical care and the value of productive output lost to morbidity, and premature mortality among smokers), since economic benefits from tobacco industry is offset by expenditures for purchasing tobacco. Two distinct methodologies will be applied to measure the economic costs of smoking cigarette, the human capital and willingness-to-pay approaches. This article used the former method. In 1985, total economic losses due to smoking was estimated as 505.7 billion won, which was composed of morbidity losses 64.9 billion won, mortality losses 429.1 billion won and indirect costs 11.7 billion won.