tocacco plant Native American Tobaccoo flower, leaves, and buds

tocacco Tobacco is an annual or bi-annual growing 1-3 meters tall with large sticky leaves that contain nicotine. Native to the Americas, tobacco has a long history of use as a shamanic inebriant and stimulant. It is extremely popular and well-known for its addictive potential.

tocacco nicotina Nicotiana tabacum

tocacco Nicotiana rustica leaves. Nicotiana rustica leaves have a nicotine content as high as 9%, whereas Nicotiana tabacum (common tobacco) leaves contain about 1 to 3%

tocacco cigar A cigar is a tightly rolled bundle of dried and fermented tobacco which is ignited so that its smoke may be drawn into the mouth. Cigar tobacco is grown in significant quantities in Brazil, Cameroon, Cuba, Dominican Republic, Honduras, Indonesia, Mexico, Nicaragua, Sumatra, Philippines, and the Eastern United States.

tocacco Tobacco is an agricultural product processed from the fresh leaves of plants in the genus Nicotiana. It can be consumed, used as an organic pesticide, and in the form of nicotine tartrate it is used in some medicines. In consumption it may be in the form of cigarettes smoking, snuffing, chewing, dipping tobacco, or snus.

tocacco Cigarettes are smoking products consumed by people and made out of cut tobacco leaves. Cigars are typically composed completely of whole-leaf tobacco. A cigarette has smaller size, composed of processed leaf, and white paper wrapping. The term cigarette refers to a tobacco cigarette too but it can apply to similar devices containing other herbs, such as cannabis.
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Do smoke-free laws affect revenues in pubs and restaurants?

In many countries, the propagation of smoke-free air policies has been slowed by fears that restrictions on smoking may have a pub and restaurantnegative impact on businesses. The most vigorous debate has revolved around the business activity of pubs and restaurants. Debates centre on the claim that there will be a loss of revenue as a result of smokers visiting these establishments less frequently, cutting their visits shorter and spending less money than they otherwise would if smoking were permitted. Against this, it is argued that the premise that smokers would change their habits is wrong or that even if some smokers reduce their visits, it could be balanced by non-smokers increasing their visits. An extensive and growing body of literature on the economic impact of smoke-free policies in the hospitality sector shows that smoke-free air policies have no economic impact on restaurants, pubs and other segments of the hospitality industry, with the possible exception of gaming establishments. However, most of this research has been conducted in regions of the world with a climate less hostile to outdoor smoking than the cold and wet Norwegian climate. In addition, many studies have also been limited to a short time period after the law was introduced, and few studies have had the data to compare and analyse the effects for restaurants and bars separately. This article contributes to the existing literature by examining the long-term effects of the law on smoke-free environments separately on the revenues of pubs and restaurants in a geographical region with a cold climate.

The smoke-free law came into effect on 1 June 2004. The results from a comprehensive evaluation show that the introduction of the smoke-free law was followed by a reduction in airborne nicotine and total dust in pubs and restaurants, and a decline in urinary cotinine levels in non-smoking hospitality workers. Service workers were also observed to have increased lung function, a decline in respiratory symptoms and better self-reported respiratory health. Hospitality workers found a total ban easier to enforce than the previous partial ban and patrons reported better air quality, increased well-being and high and increasing—especially among smokers—support for the law. Population-based consumer surveys showed no significant changes in the frequency of pub/bar and restaurant visits following the implementation of the law.

However, until now, no methodologically sound study has been conducted in Norway using valid, reliable measures of business activity covering the period before and after the implementation in order to separate the economic impact of the law from underlying economic trends and to allow sufficient time for businesses, smokers and non-smokers to adapt their behaviour to the policy. With half of the country situated north of the Arctic Circle and the remaining parts also regularly exposed to cold winters and rainy summers, Norwegian smokers might be expected to be more affected by a law against indoor smoking than smokers living in more temperate climes. Business owners and hospitality associations therefore expressed concern when advocates of the law extrapolated evidence from research conducted in the USA and Australia and applied it to Norway. With 36% regular smokers (27% daily and 9% occasionally) at the time of implementation, Norway also had higher prevalence of smokers than most countries with such policies. We therefore hypothesised that the smoke-free law would have a larger economic impact in Norway compared to the lack of impact reported in the scientific literature on the topic.

The distinction between pub and restaurant revenue means that the results do not contradict previous results using the same methodology. For instance, Luk et al.  showed that the law on smoking did not have an effect on revenue, but this was for the hospitality industry as a whole since “bar and licensed restaurant sales could not be analysed separately.” Analysis on bar revenues in the United States has also showed no statistically significant effects of smoke-free laws for bars.

Because annual restaurant revenues are almost 20 times larger than pub revenues in Norway, the results for the restaurants are most important for the industry as a whole. Hence, our results are in agreement with Luk et al. [14], but it extends the analysis by examining a sub-sector in which the law may have had a statistically significant effect. As for the economic importance of this, the size of the coefficient is relatively small, but not insignificant. The direct effect of the smoke-free law, given the size of the coefficient, can be found by calculating the predicted level of pub revenue as a share of personal consumption before and after the law. The overall share of pub revenue out of all personal consumption before the law was 0.077 in 2003, and the size of the coefficient implies that this share would be between 0.063 and 0.073 after the law i.e. a reduction between 5 and 18% in pub revenue’s share of total personal consumption. The actual change between 2003 and 2005 was a reduction of 8%.

Third, the results indicate that it may be important to correct for other variables, such as temperature. This variable was not significant at the 5% level, but it was significant at the 10% level. The coefficients in the models without temperature showed that the model without temperature exaggerated the effect of the law. Since the law was introduced during an unusually cold summer, one would expect below average revenues, and this change should not be confused with the effects of the law. Previous research has mainly been conducted in areas with a more temperate climate. Cold climate could affect revenue negatively in the sense that smokers would refrain from visiting pubs and restaurants as they have to step outside to smoke. However, it should be noted that many restaurants adapted to the new legislation by providing blankets, heaters and shelters for smokers. This may explain why the coefficient for temperature was only significant at the 10% level.

The statistical analysis focuses on the long-run overall effect of the law on smoking. This long-run effect may be composed of effects of varying strength in the short and long run. The data on revenues show that there was little, if any, immediate or long-term impact on restaurant revenue since this grew more in 2005 (3.3%) than in any of the three previous years. Pub revenue is more interesting since it declined by 1% in 2005 and increased by a record 7.8% in 2006. This suggests that there was some short-run impact and then a readjustment towards a more natural level. It also suggests that the statistical analysis of revenue alone is correct in finding no long-term effect of the law, since the short-term negative change was balanced by a positive change the next year.

Results indicate that smoke-free laws do not affect restaurant revenue directly or as a share of private consumption even in a country known for its harsh climate. There is some evidence for a short-run effect on pub revenue as a share of private consumption, but there is no evidence of a short-run effect on the absolute level of pub revenue and no evidence for a long-run effect using either measure.

By Hans Olav Melberg
Email: [email protected]

By Karl E. Lund
Email: [email protected]

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1 comment to Do smoke-free laws affect revenues in pubs and restaurants?

  • Beverly

    Finally an article that cuts through the haze of hysteria around smoking bans!

    The “loss of business revenue” is a cry heard from all jurisdictions that have proposed smoking bans and none of them have ever proved to be true in the long term.
    Smoking restrictions and tobacco taxes have proven to be effective in reducing the prevalence of smoking in societies.

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