economic impact of smoke-free policies on restaurants and bars

8/8/2019 Economic Impact of Smoke-Free Policies on Restaurants and Bars

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Economic Impact of Smoke-free

Policies on Restaurants and Bars

Andrew Hyland, PhDAssociate Member

Roswell Park Cancer Institute

[email protected]

November 2002


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ISSUE AT HAND Secondhand smoke causes lung cancer and heart disease.

Nearly all people are exposed to secondhand smoke.

Therefore, secondhand smoke is an important public healthproblem.

Policies restricting smoking in public places reduceexposure to secondhand smoke.

Main arguments against policies restricting smoking inpublic places include

Lost revenue

Freedom of choice

Government should butt out

Law is not enforceable


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ANALOGY Studies evaluating the impact of smoke-free laws are

conceptually similar to studies looking at the sideeffects of an experimental drug

The DRUG is the POLICY

The SIDE EFFECT is POOR ECONOMIC OUTCOME

If the drug is too toxic, then it wont be used


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METHODS USED TO DATE

Several methods have been used to study the

economic effects of smoke-free regulations Aggregate taxable sales Restaurant employment statistics

Surveys of consumers

Surveys of restaurant owners Compliance/Complaint files


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STUDY QUALITY CRITERIA

Caution needs to be used when interpreting studiesexamining the economic impact of smoke-free laws.

Siegel proposed 4 criteria to use Us of objective data (e.g., tax receipts or employment

statistics)

Inclusion of all data points after the law was implementedand several years before

Use of regression or other statistical methods that control forsecular trends and random fluctuation in the data

Appropriate control for overall economic trend.

Others also consider the funding source and whetherit is published in a peer-review publication


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CONCLUSIONS AND QUALITY

CRITERIA

Scollo et al examined the relationship between studyquality and their stated conclusions (in press, Tobacco

Control). The odds of using only a subjective measure was 4 times that of

studies concluding a negative impact

The odds of not being peer-reviewed was 20 times that of studiesconcluding no such negative impact.

All of the studies concluding a negative impact were supported bythe tobacco industry

93% of the tobacco industry-supported studies concluded a negativeeconomic impact compared to none of the non-industry supportedstudies.


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AGGREGATE TAXABLE SALES -Restaurants

As of Nov 2001, 20 studies have examined taxable sales inrestaurants - 19 conclude no effect or a positive impact and the1 tobacco industry funded study found a negative impact

Selected published studies include No effect on restaurants or bars in CA and CO after an average of 4

years of follow-up based on pooled data from 15 cities with smoke-freerestaurant ordinances and 5 cities and 2 counties with smoke-free barordinances (Glantz 1997)

No effect on restaurants in one Arizona city after 1 years of follow-up(Sciacca 1998)

No effect for 32 MA towns (Bartosch 1999)

No effect in New York City restaurants or hotels 1 years after the lawtook effect (Hyland 1999)


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Taxable Sales from Eating and Drinking

Establishments in New York City and the Rest of

New York State*, 1990 to 2000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

4,500,000

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ThousandsofDollars

Law took effectNYC

Outside NYC

* The rest of New York State is all counties in the state exceptNew York City, Suffolk, Westchester, Erie, Monroe, Nassau, Livingston, and Rockland.


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As of Nov 2001, 4 studies have examined taxable sales in barsand 2 in hotels, all 6 conclude no effect

Selected published studies include

No effect or perhaps even positive effects on tourism and hotelrevenues in 3 states and 6 cities (Glantz 1999)

Bar revenues increased following smoke-free bar regulations in CA(Glantz 2000)

Hotel taxable sales in New York City far outpaced sales in the rest ofNew York State without smoke-free regulations (Hyland 1999)

AGGREGATE TAXABLE SALES

Bars and Hotels


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Bar revenues in California continued to increase after the smoke free

bar law took effect in 1998 (dark blue line), three years after the

smoke free restaurant provisions took effect in 1995 (light blue line)


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Pros objective data collected in a consistent, uniformmanner

Cons aggregate data can mask trends in subsets, data oftenincludes sales from places not under the jurisdiction of theregulations

Considered to be an ideal outcome to assess economic impact

AGGREGATE TAXABLE SALES

Pros and Cons


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20

22

24

26

28

30

Jan

Feb

Mar

April

May

June

July

Aug

Sept

O

ct

N

ov

D

ec

1997 1998

The number of restaurant emp oyees in Erie County New York has

remained virtually unchanged before and after its smoke-free law

waspassed in January 1998.


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SURVEYS OF CONSUMERS

16 studies of consumers conducted all 12 non-industry studiesand 2 industry studies report no effect, 4 industry studies reportnegative impact.

Smokers dine out less, non-smokers dine out more with no neteffect on dining out frequency five months after NYC law took

effect (Corsun 1996) Same conclusion in survey 18 months after NYC law took effect(Hyland 1999)

Surveys of consumer intentions before smoke-free isimplemented generally suggest overall patronage will increase(Biener 1997, Biener 1999, Wakefield 1999); though opinion pollsdo exist that report smoker patronage will decrease (Fabrizio,McLaughlin, and Associates 1994)

Pros the source of dining patterns

Cons recall bias, not objective, bias due to personal views aboutthe law


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Results from New York City Patron Survey in 1997 - Some smokers are

dining out less often, some non-smokers are dining out more often; but for

mostpeople, the smoke-free law hasnt made a difference.

%11%

%

9%

72% %

%

20%

0%

0%

0%

100%

Smokers Non-smokers

More often Less often Same


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SURVEYS OF RESTAURATEURS

44 restaurateur studies all 13 non-industry studies report no effect

5 of 6 studies with an unknown funding source report a negativeeffect

all 25 industry funded studies report negative impact

One-third of all restaurants (both under jurisdiction of thelaw and not under jurisdiction of the law) reporteddecreases in business 18 months after the NYC law took

effect i.e., no effect of the law after smoke-free law tookeffect (Hyland 1999)


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SURVEYS OF RESTAURATEURS

Unpublished private reports yield significant decreases in reportedbusiness such as

16% reduced sales and 40% reduced workforce in a survey five monthsafter NYCs law (Fabrizio, McLaughlin, & Associates 1995)

63% of NYC restaurateurs report the law is hurting their business in a

survey 2 months after implementation (Penn + Schoen Associates, Inc.1996)

Reported 25% to 35% revenue decreases in restaurants among interviewswith 25 retail establishments in Mesa, AZ (Applied Economic 1996)

Pros who better to ask if there has been an impact? Cons recall bias, bias due to personal views about the law, not

objective


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COMPLIANCE/COMPLAINT FILES

Studies of compliance are critical if nobody isobeying the law, then dont expect to see an effect

Fewer complaints 2 years after NYC law than beforewhen law required separate sections (Hyland 1999)

Complaint levels at same rate 12 months after ErieCounty, NY law implemented (Hyland 2001)

Pros need to measure compliance to assess impact

Cons correlation between complaints and

compliance may be low


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Relativelyfewcomplaints

aboutthelawhave

registered,NewY

orkCity199

5-7.

020

40

60

80

100

120

140

Apr-95

May-95

Jun-95

Jul-95

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Jan-96

Feb-96

Mar-96

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Sep-96

Oct-96

Number ofComplaints


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SUMMARY OF LITERATURE

Virtually all published studies show no adverse aggregateeffect in restaurants (most studies), hotels (some studies),and bars (fewest studies), regardless of study method used.

Studies showing adverse consequences typically haveflawed methods, rely on survey data or anecdotal reports,or are funded by a restaurant or tobacco interest.

Restaurant business remains healthy after smoke-freedining policies are implemented.


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FUTURE RESEARCH

Many believe the issue is closed and we already knowthe answer smoke-free laws have no effect (Glantz1999)

From a public health perspective future studies needto be done in more diverse settings with improvedmethods such as isolating taxable sales specific torestaurants only.

From a purely scientific perspective, future studiesshould examine individual level data by looking atactual sales over time before and after a smoke-freelaw.


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FOR MORE INFORMATION

http://www.tobaccoscam.ucsf.edu/target/index.cfm - website targeted towardrestaurant owners

http://www.vctc.org.au/publ/reports/Hospitality_paper_summary.pdf for summaryof all reports on the economic impact of

smoke-free policies in the hospitalityindustry.

economic impact of smoke-free policies on restaurants and bars

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