Exemptions and employment

A new study from the University of Minnesota School of Public Health about the impact of smoking bans on restaurant and bar employment is making news this week. The study examined 10 Minnesota cities from 2003-2006, tracking employment numbers and searching for effects correlated with different smoking policies (comprehensive bans, bans with exemptions for bars, and no bans). No statistically significant impact was found, so the researchers conclude that governments should pass comprehensive smoking bans without concern for economic effects. Predictably, the conclusion has been picked up uncritically by the press, and the authors hope it will influence debates over statewide bans.

The study is gated online so I wrote to lead author Liz Klein, now at Ohio State University, and she was kind enough to send me the full paper so that I could look at the methodology. I’ll get to that in a moment, but first I’d like to reiterate that employment effects are among the least important arguments against smoking bans. The real question is whether consenting adults should be free to assemble in a privately owned business to enjoy a legal product. Reasonable people can disagree about various measures to reduce indoor smoking, but to eliminate all businesses where adults can enjoy tobacco and alcohol is a blatant violation of their rights to property, assembly, and contract. Empirical questions about employment are an interesting part of the debate over smoking bans, but while discussing them we shouldn’t lose sight of how anti-liberal comprehensive bans really are.

That said, let’s get to the study.

Fortunately, the methodology is straightforward. Most research in this area focuses on tracking changes in employment in one jurisdiction before and after a smoking ban. This one takes a different approach, tracking employment in 10 cities classified by their smoking policies. Employment was measured by restaurant’s and bar’s self-reported numbers of employees, which they are required by law to send to the state. Two of the cities had no bans on smoking in bars and restaurants and served to identify any secular changes in employment trends. After adjusting the numbers into a per capita measure to account for population differences, no significant effects were found.

All of this is fine as far is it goes, but there are some important limitations. The first is that the cities in the sample weren’t randomly treated with smoking policies. Comprehensive smoking bans get passed in the cities that have the political will to pass them and thus presumably have many residents who like going out to smokefree businesses. Cities with looser bans or no bans at all likely have more relaxed attitudes toward smoking. The employment effects of local bans are therefore potentially very different from those of bans imposed statewide, in which, for example, the preferences of urban voters might trump those of rural bar patrons who’d very much enjoy a cigarette and a beer.

This isn’t idle speculation. A 2006 study (not gated) by economists Robert Fleck and Andrew Hanssen examined California’s statewide smoking ban that went into effect long after many California communities had passed their own local restrictions. Here is a summary by Michael Pakko at the St. Louis Fed:

[Fleck and Hanssen] analyzed quarterly restaurant sales data for 267 California cities over 25 years. They find that the measured impact of smoking bans differs between local bans and the statewide ban. In what the authors call their “naïve” specification that treats all smoke-free laws the same, they find a statistically significant 4 percent decline in revenues associated with smoking bans.

When they estimate the effects of the statewide ban and local bans independently, they find that the measured decline in restaurant sales is attributable to the statewide ban on cities without local bans. The measured effect of the statewide ban is nearly 4 percent, and it is statistically significant. The independent effect of local smoking ordinances is estimated to be very small and is not significant. These findings are consistent with the interpretation that locally originated smoking bans have little effect, but smoking bans that are imposed on a community by a higher jurisdiction can have a detrimental economic impact.

Fleck and Hanssen go on to uncover an important specification problem: They find that cities that adopted smoke-free laws were systematically different from those that did not. The authors find that sales growth tends to be a predictor of smoking bans, rather than the other way around. This “reverse causality” calls into question many earlier findings, and it poses problems for using data from California in drawing inferences about the economic impact of smoking bans elsewhere.

I asked Professor Klein if she thought this limitation should be considered when applying her study to Ohio, where bar owners are currently reporting declining revenues and seeking an exemption from the state. She responded:

While randomization is an ideal option to deal with the potential for confounding, a quasi-experimental design, as we have implemented, is the next best option. We selected comparison cities (by size and type of community) in order to best account for time trends in effect at the time of study (2003-2006).

In other words, the limitation is real, and the applicability of the study depends on one’s confidence that the two small control cities are an adequate substitute for randomization. Given the inherently non-random distribution of local smoking bans, I suggest a caveat ought to be included in discussions of statewide exemptions.

The second major limitation is even more serious, and that is that the study only tracks effects at the community level. Individual businesses could be hit drastically hard by a ban and not show up in the data if local restaurants and bars in general are performing well (and remember, a successful hospitality industry may be one predictor that a community will pass a ban). Klein and the other authors acknowledge this in their paper:

An important limitation in the use of aggregated data is that we are able to estimate an overall average, but we are not able to determine differential effects at the business- or neighborhood-level.

I mentioned this to Klein as well. She replied:

Our study does not make claims about individual businesses, as we had data at the community-level only. However, policies are enacted at the community level, so it seems that evaluation of policy effects at the community level are appropriate. Ultimately, decision-makers have to weigh the scientific and economic evidence to make the best decisions for the health of a community.

Voters and legislators consider exemptions to smoking bans precisely because they realize that policies that are good for the community at large might be disastrous and/or unfair to certain businesses within it. To say that community-level effects are the only thing that matter is to dodge the question. Essentially, it is to tell people put out of business by a ban to suck it up because on the bright side their competitors are doing well. Fortunately most people are more tolerant and compassionate than that and so exemptions to smoking bans may continue to pass.

Two other limitations of the study also come to mind. The first is that job numbers are an imperfect measure of the economic effect on employees. They tell us how many people are working, but they don’t tell us how their hours on the job or tip revenue have been affected. Employees in some bars included in the study might have been made worse off by anti-smoking policies and we wouldn’t know it from the data.

The second is that 2003-2006 were good years for the hospitality industry. The economic picture is very different in 2008-2009. Bars in the study period were likely able to absorb the shock of smoking bans more easily than bars today.

In summary, this new study is interesting and credible. It (and others) suggests that ban opponents sometimes overstate the economic case against smoking bans. Its application is limited, however, and says nothing about the potentially disastrous impacts of smoking bans on individual businesses and employees. Policy makers should continue carving out exemptions to smoking bans for the sake of business owners, their patrons, and the people who choose to work for them. A free society can and should tolerate a diversity of smoking options.

Comments

  1. Bob says:

    No one came around to study all the small neighborhood bars in my area of Chicago that keep their customers by ignoring the ban. No one is complaining except the neighbors of bars that comply during the summer.

  2. Jacob, are the authors professional economists? If not, why were they chosen to do such an important study?

    How do their conclusions reconcile with the findings of University of Wisconsin economists Chad Cotti and Scott Adams who find that bar employment declines up to 16 percent due to bans.
    http://www.bepress.com/bejeap/vol7/iss1/art12/

  3. A new study by Federal Reserve economists measuring the negative effects of the Illinois smoking ban on Illinois casinos is about to be released. Aldermen of the City of St. Louis have seen an preliminary draft of the study. It isn’t pretty.

  4. smokedbacon says:

    A smoking ban study isn’t worth a dang nor the researcher if the elements of a ban are not accounted for. For a good example is Ohio, a radical ban but it has very limited enforcement that allows most bars to continue to smoke.
    This can be clearly seen by the amount of propaganda anti smoking groups sprew out in press releases trying to get more funding for themselves.
    Clearly bars that have not stopped smoking are a very poor example to to try to equate as they wouldn’t be losing business! SMOKE THAT!
    By the way the study that was done was for the anti smoking cartel, enough said?

  5. What if the governments mandated that all currently smoke-free hospitality venues MUST provide a smoking section to accommodate smokers, against the wishes of business owners who choose
    to go smoke-free of their own free will?

    That wouldn’t be fair, would it?
    Neither are government mandated smoking bans.

  6. Argus says:

    Anyone who actually bothers to read the Klein report (“Does the Type of CIA Policy Significantly Affect Bar and Restaurant Employment in Minnesota Cities?” Prevention Science, June 2009) will discover that the most significant result is NOT mentioned in the abstract or in the media news bites, namely that partial bans are associated with an INCREASE in bar and restaurant employment compared against no bans. Comprehensive bans, however, are associated with DECREASES in employment compared against both no bans and partial bans.
    In other words, it is the COMPROMISE position of providing BOTH smokers and nonsmokers with a share of hospitality venues that leads to greater prosperity of such businesses overall. Comprehensive bans, on the other hand, are net job killers.
    It should be noted that NONE of the results reached the statistical “gold standard” of a p-value of 0.05 or less (i.e., only a 5% chance that the observed difference is just a fluke), but the partial ban increase came closest with a p-value of 0.08. It is therefore curious that the result with the highest confidence is ignored in most reporting.
    Instead, the authors COMBINED the partial and comprehensive ban results to concoct a net gain in employment for ANY type of ban vs. no ban. This was possible ONLY because the partial ban gains offset the comprehensive ban losses. However, this also changed the subject. Instead of addressing the TYPE of ban policy – as stated in the report title, no less – the distinction was buried in the combination, such that bans in general appear GOOD for business, with the implication that stronger bans must be even better.
    But if there is a conclusion to be derived here, it is that the compromise of partial bans, which at least partly satisfy the opposing demands of both smokers and nonsmokers, is a more successful and prosperous approach to indoor air policies for the hospitality industry than the imposition of total bans.

  7. The authors of this study had two separate sets of NAICS employment data: Data for bars, AND data for full-service-restaurants. They deliberately chose NOT to publish any analysis on what happened to bar employment.

    Some might conclude that they simply withheld such results because it would have damaged the political cause the researchers and their antismoking funders, ClearWay Minnesota, intended to support. There’s an obvious motivation to have performed such a separate analysis since the results, if they went the “right” way, would have made the study’s conclusion FAR more powerful! After all, just picture the headlines: “New Study Shows Even BARS Gain Business After Smoking Bans!”

    When I asked the study’s lead author about this I was simply told that the analysis of both together was “the most appropriate” approach. I then noted that I found this puzzling unless the researchers were fairly new to the field since historically it’s always been thought that bars suffer disproportionately. I asked, “Are you saying such a separation and its value to your study did not occur to you and your colleagues and that none of you or your peer-reviewers / journal editors thought to take a look at that data?”

    Her response to me, instead of offering a reasonable explanation, was this:

    “You may want to familiarize yourself with some of the scientific literature on economic effects on the hospitality industry.”

    She then attached an old study blaming any contrary research results on tobacco industry funding and corruption. This seemed a rather odd response since my own research has always been quite explicitly unfunded.

    This is not what I would call a professional response to a reasonable question. Picture if I did a study on the economic meltdown, examining the data for its effects on Blacks and Whites. I know the Black community has a better reason for concern and has also been most featured in the media as suffering, but despite having both sets of data I simply decide it is “most appropriate” to combine the numbers for Blacks and Whites and present a report concluding that there was no harm from the meltdown. I do this despite knowing that, since Whites outnumber Blacks ten to one, any Black suffering will of course be covered up.

    I then present my study to the media, arguing there’s no need for government change by saying, “We certainly did not detect anything close to the dramatic claims that opponents make based on the concerns that they have for Blacks.” (That’s an actual newspaper quote from the lead researcher with the word Blacks substituted for Bars.) The headlines the next day then read: “New Research: Economic Meltdown Does Not Hurt Blacks, Whites.”

    And when asked why I didn’t examine Black suffering separately I simply reply that I felt combining the data was “more appropriate” while telling my questioner to study economic history and handing them a rather questionable racial pamphlet.

    My opinion about researchers who would do such a thing may seem harsh, but I fail to see much, if any, path between the choices of incompetent or unethical. The fact that my emails did not elicit a response of “Gee, we ARE new to the field and just didn’t think of separating bars.” would seem to strongly imply the latter point of view.

    The fact that the study cited only two pieces of contrary research, with one being an old radio broadcast and the other one being cited improperly (the only improper citing among all 36 references), lends support to that view.

    The fact that the research compared the three main variables in an extremely odd way that lumped two of them together quite awkwardly gives more support to that view.

    The fact that this study ignored an earlier study by the same organization that showed drastic customer reductions in 7 out of 10 bars in publicly shared data, refused to release the rest of their data, and seem to have somehow even removed the shared data from regular Internet channels adds even further support.

    And the final fact, the fact that reasonable questions were met with noncommunicative responses, seems to complete the perception of ethical questionability in the case of this study.

    Any legislature considering this research in their decision-making process regarding a smoking ban needs to go back and take a very hard look both at it, and at all the other questionable data they have been given. I have done extensive research and writing in this field, and I can assure you: This study does not stand alone in its practices.

    Michael J. McFadden
    Author of “Dissecting Antismokers’ Brains”

  8. Argus says:

    My previous comment below needs some clarification. In the Klein study, a verdict of statistical NON-significance of the differences in restaurant and bar employment among no bans, partial bans and comprehensive bans WAS the result desired by its authors. It allows them to claim that whatever differences were found were not large enough or “tight” enough to demonstrate that they were real, and thus claim that there are no significant employment consequences of bans.
    My complaint (among those raised by other folks) was that 2 of the results came close to significance, and were completely opposite – namely, that partial bans were associated with MORE jobs but comprehensive bans were associated with FEWER jobs, particularly when moving from a partial to a full ban. It is THIS comparison that the study glossed over, but which I contend is worthy of more attention. Since employment was the subject of the study, one would assume that more is better – and therefore that a partial ban is as far as any CIA policy should go.

  9. sheila says:

    Ms. Klein told me that her funding, for the “STUDY,” was from Clear Way Minnesota. I then asked her if she was aware that this money originated at Robert Wood Johnson Foundation, who DIRECTLY benefit from the sells of their partner’s, Johnson and Johnson, sales of Nicoderm, Nicorette, and Chantix. She seems curiously unaware that she, her school, Clear Way, and MANY other foundations, are funneling this nicotine replacement money into the smoking ban lobbying effort.
    I consider her, her school, Clear Way, and all the others, grant sponges, who will do ANYTHING, and say ANYTHING to get a nickel off anyone. They will support ANY agenda for dollars.
    I am filling out the Internal Revenue Form to send in to make a complaint against the tax free status of Robert Wood Johnson Foundation. This nationwide agenda to get everyone on their nicotine replacement SHOULD BE TAXED!!!!! And ALL funds used for this purpose, including Quit Lines, which direct prople to use the patches and gums, are NOT non profit!

  10. Ad says:

    The “study” of the smoking ban effect on jobs was conducted in Minnesota, however, Ms Klein, being from out of town, probably didn’t notice the 327+ closed bars & restaurants and 10,000+ laid-off hospitality workers since smoking bans were enacted here in MN.

    Author Liz Klein explains Minnesota / OSU’s “study”

    “…the research took place between 2003-2006…..”

    But Minnesota’s statewide ban didn’t go into effect until 2007, so you can see the reason they found virtually no statistical harm.

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  1. [...] Here is a blog on the subject from one who actually got a hold of the study. Possibly related posts: (automatically generated)Reality CheckDebunking the WISPIRG study: part 3a [...]

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