There Is A Butt, After All

By Oscar Raymundo

As more states pass indoor smoking bans—Illinois and Maryland laws go into effect this year—policymakers are often told there’s no downside, says Michael Pakko, an economist at the Federal Reserve Bank of St. Louis. “But I’m skeptical about free lunches,” he says. In the January issue of the St. Louis Fed’s Regional Economist, Pakko argues that such bans can lead to revenue and job losses. His study of Delaware’s three casino-racetracks found a loss of 15% in slot machine revenues in the 2 years after a clean-indoor-air act took effect in 2002. He also cites a 2001-04 nationwide study by two economists now at the universities of Wisconsin (Milwaukee) and South Carolina. It found smoking bans caused job declines of 4% at bars. “Smoking and drinking go together—they’re what we call ‘complementary goods,’ ” says Pakko, who acknowledges that the bans involve “public health as well as economic issues.”