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There is big negative externality in smoking and over-consumption of alcohol Essay

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National Health Service (NHS) is universal health care provided to all those living in the UK. In the past few years, however the patients have been complaining about the long waiting lists, low quality services, etc.

A large number of patients who refer to the NHS for treatment are those who do not look after themselves and are not ready to change their negative habits to maintain a healthy life, for example some do not pay attention to the advice of their doctors to give up their smoking or drinking, or do some exercise or avoid overeating. Prime Minister Gordon Brown is now saying that it is not fair for those who look after their health to carry the burden of those who abuse the services of the NHS by ignoring medical advices and causing long queues for medical treatment by smoking and drinking carelessly.

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There is big negative externality in smoking and over-consumption of alcohol. The damage caused by smokers and binge drinkers extends over and above the individuals using them. Cigarettes and alcoholic beverages can therefore be classified as demerit goods. The social costs of the use of these goods are higher than the price paid for them by their consumers. This means that there is a marginal external cost to such goods. As a result, a welfare loss triangle (the blue shaded area seen on the diagram above) is formed.

Governments attempt to correct the market failure by introducing excise taxes on goods such as alcohol and cigarettes to cover this external cost. However, even when the prices of these Giffen goods rise, the demand for them does not stop because their usual consumers do not like to change their lifestyles. As time passes it becomes clear that the estimated externalities due to the use of these goods were underestimated and there is still need to address the problem. Sometimes, the problem is addressed by the direct increase in the prices of the same goods, or by using some other means such as shifting the burden of the cost of the externalities as they occur on the consumers of the goods, such as by asking the consumers of these goods to pay for the cost of the medical treatment they receive due to their loss of health by abusing these goods.

364,000 patients are admitted to NHS hospitals each year due to smoke-related diseases. Some 1.7bn pounds is spent every year to treat diseases caused by smoking, such as lung cancer, bronchitis and emphysema. The NHS spends a similar amount on alcohol-related diseases such as cirrhosis. The number of patients suffering from cirrhosis has tripled in the past decade. The government has certainly attempted to encourage a better lifestyle in the country in the same period. It has even sometimes been forced to introduce some restricting rules, for example it banned smoking in public places in summer 2007. According to a study of nine Scottish hospitals, admission due to heart attacks has fallen by 17 per cent during the first year after the introduction of the smoking ban in public places. We can therefore conclude that this government policy has had a significant result.

Although the government attempts to control the negative externalities of alcohol consumption and smoking through taxation and regulatory policies, yet a large number of those on the NHS waiting list are those who suffer from smoking and drinking-related diseases.

Paul Mason, a GP in Portland, mentions the case of George Best, the football player, who drank himself to death in 2005 only three years after a liver transplant. He says:

“If an alcoholic intends to drink himself to death then that is really sad, but if he gets the liver transplant that is denied to someone else who could have got the chance of life then that is a tragedy.”

It is unfair to those who take responsibility for their health to wait as long as those who carelessly drink and smoke. In a survey among 870 families and hospital doctors, almost 60 per cent believed that NHS could not provide full healthcare to everyone and that some individuals should pay for the services they receive.

In my opinion, the first step for the government is to wipe out the information failure within the society, using media such as magazines, newspapers and TV programmes. The second step could be providing incentives to those who quit drinking and smoking or to those obese patients who make an effort to lose weight through diet or by going to gym. If none of these works, then it may be the time for the government to take action by cutting spending on those patients who opt not to take responsibility for their actions or inactions.


1 .The daily telegraph, Tuesday, January 1, 2008

2. http://www.martinfrost.ws/htmlfiles/jan2008/dont_treat.html

3. www.scotland.gov.uk/News/Releases/2007/09/10081400 – 22k

4. Economic for As, by Colin Bamford

5. Economic, course companion, Jocelyn Blink and Ian Dorton

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