Friday, January 11, 2008

Danke for Smoking

Nobel Prize winner Gary Becker’s theory on discrimination shows that not only does discrimination hurt those who are discriminated against, but also those doing the discrimination. As I remember the theory goes something like if companies discriminate against women, then those companies bid up the price of men’s wages.

Then if men and women are equally productive a non-discriminating firms could hire women cheaper and drive the discriminating firms out of the market.

Although not exactly discrimination, many companies are banning smoking at their work place. In a sense by not providing a place to smoke, they are a providing a lower wage. A company who wanted to attract smokers could offer lower salaries with a smoking area, and undercut the smoke banning firms. However, by banning smoking firms might attract non-smoking workers who want to work in a non-smoking environment.

So this may explain why a German boss fired all his non-smoking workers.

1 comment:

rjgitter said...

The idea of externalities at the workplace and elsewhere is fascinating. One would hope for a Coasian solution, but as I like to say "Common courtesy isn't very common." Anyway, about 20 miles from me in Central Ohio is the headquarters of Scotts Miracle Gro. Last year they adopted a policy than banned smoking by their employees ANYWHERE. Emloyees were given tests for nicotine, so if they only smoked at home, they could be fired. (I believe it is now in tbe courts so I am unsure of where it stands.)

Seth's brother Dan was quite a question asker as a kid. One day he prefaced a question by stating that "Since it is illegal to be drunk, even in your own home.." and I had to tell him, that one could be drunk in the privacy of one's home. So, it makes me think, why shouldn't people be able to smoke in their own homes? Where is the externality? One could claim it affects their health and the firm's insurance costs, but what of those that are due to people being overweight, not exercising or worrying too much? Since one drink a day is healthier than none, should we penalize tea-totalers as well?

OK, enough of a rant on externalities. But check out the following two articles in sequence. You can see why I tend to come down on the side of choice most often.

Bob Gitter