It is now pretty well established that second hand smoke is bad. How do you handle it though? Apparently, the solution is to ban smoking from public places, in the hope non-smokers will not be affected. Now, are bans truly effective? The economist would respond that ban are generally not the solution to a problem of externalities, and that using taxes or subsidies is a much more effective way to address this problem.
Jérôme Adda and Francesca Cornaglia come to exactly this answer as well. They notice that bans are even worse than you think, because smokers smoke as much as before, but more in a private setting, thus exposing more the more vulnerable ones, children. How can you try to reach smokers in their private setting? Not by a ban, which is unenforceable. But by increasing the tax on tobacco products, one can achieve this, even if this means increasing the tax massively. But given that the tax-elasticity of passive smoking is larger than for active smoking, the tax increase need not be as large as you think. And besides, smokers are actually in favor of tax increases, as they see it as a commitment device to quit (Jonathan Gruber and Botond Kószegi).
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