Smoking In Australia Essay

The largest single preventable cause of death and disease in Australia is smoking (Australian Bureau of Statistics, 2014). Over the last 60 years, the premature death toll has reached an excess of 900,000 and studies have suggested that it will pass the million marks within the next decade (Tobacco Working Group, 2009). A study conducted by the Australian Burden of Disease in 2003, stated that tobacco was responsible for the greatest disease burden in Australia (Magnus et al., 2011) as smoking kills 15,000 Australians each year (Begg et al., 2007) and costs Australia $31.5 billion (Collins & Lapsley, 2008) in social (including health) (Hurley & Matthews, 2008) and economic costs (Department of Health, 2015). Due to this enormous social and economic cost, the Federal Government has implemented a four-stage tobacco excise of 12.5% from 2013 to 2016 (Department of Health, 2015; Daube & Scollo, 2013) to further reduce the amount of 14 years or

A negative externality is “a cost which is imposed on someone arising from the activity of a firm or an individual” (Coglan et al., 2015, p. 311). That is, the cost to society is greater than the cost consumer is paying for. Since consumers make a decision based on where their marginal cost equals their marginal benefit (Coglan et al., 2015), negative externalities result in market inefficiencies unless proper action is taken (Kolb, 2008). This cost can also be referred to as a social cost, as Tobacco in Australia (Hurley, 2015) explains that social cost prevails over private costs (Collins & Lapsley, 2008). Collins and Lapsley argued that the cost of smoking is a social cost as “smokers have become addicted to tobacco without full knowledge of the consequences” (Hurley, 2015). Another economic theory that is intended to correct negative externalities is a Pigovian tax (Kolb,