Dr. David Ashby

Dr. David Ashby is a Certified Financial Planner and the retired Peoples Bank Professor of Finance at Southern Arkansas University.

When I was in grade school, I recall riding in the car with my granddad one day. At that point, he had been diagnosed with emphysema and was having some difficulty breathing.

He casually remarked that if I wanted his advice, I should never start smoking. He said smoking was an addictive habit that, once started, might be hard to quit. He said if he had known the dangers, he would never have started. I recall that conversation as if it were yesterday. And while I have puffed a time or two on a cigarette or cigar, I never bought my first pack.

Back when he smoked, there were no warning labels on cigarette packages. And cigarettes were relatively cheap. My granddad probably never paid more than a quarter for a pack. And smoking was fashionable with more than 40 percent of adults smoking. Even Andy Griffith smoked a cigarette occasionally in Mayberry!

But cigarettes are no longer cheap and no longer fashionable and the dangers are certainly well known. Let’s take a look at the costs.

An average pack of cigarettes today costs a little over $6, but let’s round it to $6. While there are plenty of heavy smokers out there, it looks like average cigarettes consumed per day is about 15, or three fourths of a pack. So, at current prices, that is $4.50 per day.

Let’s assume smokers smoke on holidays and weekends. So, with 365 days in a year, that adds up to $1,643 per year. If you smoke for 50 years, that’s over $82,000 gone up in smoke.

And that assumes no further price increases in cigarettes. In fact, over the last 25 years, cigarettes have increased by roughly 7 percent per year, more than triple the rate of inflation over that same period. By the way, just for kicks, if that $1,643 were deposited annually into an account earning 6 percent, after 50 years you would have $477,000 in your account, not to mention clearer lungs!

The price of cigarettes is a big part of the cost of smoking. But there are others. If you smoke in your vehicle, expect to get less on trade-in. Dealers have to go to great lengths to get the smoke smell out of the car. According to recent research from San Diego State University, the discount averages 7 to 9 percent for the same car that’s been smoked in as compared to one that hasn’t.

The same is true for homes. If you smoke in your home, it makes it harder to sell. Realtor.com cites a study finding as much as a 29% reduction in price for smoker homes. That research is several years old. Given the hot housing market of today, let’s say that gap has narrowed to 10 percent, or even 5 percent. We’re still talking big money being lost!

What about health care costs? Certainly, smokers in general incur higher health care costs than non-smokers. However, those higher health care costs are significantly offset by the shorter life expectancy of smokers. While it depends on a number of factors, it’s safe to say smokers average ten years less in life expectancy. A reduced life expectancy can also apply to family and friends inhaling second hand smoke.

Finally, are smokers penalized when it comes to income? Yes! Study after study shows estimates varying from 7 percent to 20 percent less wages for smokers. It’s also harder to get hired in the first place. Smokers have higher absenteeism rates and less productive hours (more breaks) at work.

There’s also the issue of presenteeism (apparently a real word): you are present at work but thinking about your next smoke instead of the job. So, employers often favor the non-smoker over the smoker, all else equal.

After all that, how about some good news? The U.S. adult smoking rate is now down to about 15% from over 40% when I was a kid. And if you quit, your body begins recovering almost immediately. A Web MD article reports that after 5 years, your risk of most types of cancer is cut in half.

So let’s sum up: High direct out-of-pocket costs in the form of cigarettes combined with high indirect costs in the form of reduced earning capacity, reduced proceeds from sale of assets and shortened life expectancy. This may be a good day to quit! I think my granddad would agree.

Dr. David Ashby is a Certified Financial Planner and the retired Peoples Bank Professor of Finance at Southern Arkansas University. He holds degrees in accounting and business administration and a doctorate in finance from Louisiana Tech.

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