Review of the Economic Effect of Smokefree Restaurant and Bar Policies on the Hospitality Economy

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TC Online Presentations
www.tobaccocontrol.com
This presentation has been supported by a grant
to Tobacco Control from The Robert Wood Johnson
Foundation
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Economic Impact of Smoke-free Policies on
Restaurants and Bars

• Andrew Hyland, PhD
• Associate Member
• Roswell Park Cancer Institute
• Andrew.hyland_at_roswellpark.org
• 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 health problem.
• Policies restricting smoking in public places
  reduce exposure to secondhand smoke.
• Main arguments against policies restricting
  smoking in public 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 side effects 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
  studies examining 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
  implemented and several years before
• Use of regression or other statistical methods
  that control for secular trends and random
  fluctuation in the data
• Appropriate control for overall economic trend.
• Others also consider the funding source and
  whether it is published in a peer-review
  publication

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CONCLUSIONS AND QUALITY CRITERIA

• Scollo et al examined the relationship between
  study quality 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 studies concluding no such negative
  impact.
• All of the studies concluding a negative impact
  were supported by the tobacco industry
• 93 of the tobacco industry-supported studies
  concluded a negative economic impact compared to
  none of the non-industry supported studies.

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AGGREGATE TAXABLE SALES - Restaurants

• As of Nov 2001, 20 studies have examined taxable
  sales in restaurants - 19 conclude no effect or a
  positive impact and the 1 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 ½ years of follow-up based
  on pooled data from 15 cities with smoke-free
  restaurant ordinances and 5 cities and 2 counties
  with smoke-free bar ordinances (Glantz 1997)
• No effect on restaurants in one Arizona city
  after 1 ½ years of follow-up (Sciacca 1998)
• No effect for 32 MA towns (Bartosch 1999)
• No effect in New York City restaurants or hotels
  1 ½ years after the law took effect (Hyland 1999)

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AGGREGATE TAXABLE SALES Bars and Hotels

• As of Nov 2001, 4 studies have examined taxable
  sales in bars and 2 in hotels, all 6 conclude no
  effect
• Selected published studies include
• No effect or perhaps even positive effects on
  tourism and hotel revenues 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 of New York State without
  smoke-free regulations (Hyland 1999)

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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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AGGREGATE TAXABLE SALES Pros and Cons

• Pros objective data collected in a consistent,
  uniform manner
• Cons aggregate data can mask trends in subsets,
  data often includes sales from places not under
  the jurisdiction of the regulations
• Considered to be an ideal outcome to assess
  economic impact

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RESTAURANT EMPLOYMENT

• 5 studies have examined employment changes 3
  non-industry studies conclude no effect, the 2
  industry funded studies show negative impact
• More restaurant jobs were added in NYC than the
  rest of New York State where smoking is still
  permitted 2 years after implementation (Hyland
  1999)
• Per-capita restaurant employment in Erie County,
  NY increased faster than 6 of 7 nearby counties
  12 months after implementation (Hyland 2001)
• Unpublished private reports exist that show
  significant decreases in restaurant employment
  after smoke-free legislation in NYC,
  Massachusetts, and California (InContext, Inc.
  1996)
• Reported negative data from NYC actually come
  from the period entirely before their smoke-free
  regulations took effect
• Pros objective data, specific to restaurants,
  data are available more quickly than taxable
  sales
• Cons aggregate data may mask trends in subsets

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The number of restaurant employees in Erie
County, New York has remained virtually unchanged
before and after its smoke-free law was passed in
January 1998.
Jobs (thousands)
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SURVEYS OF CONSUMERS

• 16 studies of consumers conducted all 12
  non-industry studies and 2 industry studies
  report no effect, 4 industry studies report
  negative impact.
• Smokers dine out less, non-smokers dine out more
  with no net effect 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
  is implemented generally suggest overall
  patronage will increase (Biener 1997, Biener
  1999, Wakefield 1999) though opinion polls do
  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 about the 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
most people, the smoke-free law hasnt made a
difference.
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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 negative effect
• all 25 industry funded studies report negative
  impact
• One-third of all restaurants (both under
  jurisdiction of the law and not under
  jurisdiction of the law) reported decreases in
  business 18 months after the NYC law took effect
  i.e., no effect of the law after smoke-free law
  took effect (Hyland 1999)

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SURVEYS OF RESTAURATEURS

• Unpublished private reports yield significant
  decreases in reported business such as
• 16 reduced sales and 40 reduced workforce in a
  survey five months after 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 interviews with 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 is
  obeying the law, then dont expect to see an
  effect
• Fewer complaints 2 years after NYC law than
  before when law required separate sections
  (Hyland 1999)
• Complaint levels at same rate 12 months after
  Erie County, 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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SUMMARY OF LITERATURE

• Virtually all published studies show no adverse
  aggregate effect in restaurants (most studies),
  hotels (some studies), and bars (fewest studies),
  regardless of study method used.
• Studies showing adverse consequences typically
  have flawed methods, rely on survey data or
  anecdotal reports, or are funded by a restaurant
  or tobacco interest.
• Restaurant business remains healthy after
  smoke-free dining policies are implemented.

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FUTURE RESEARCH

• Many believe the issue is closed and we already
  know the answer smoke-free laws have no effect
  (Glantz 1999)
• From a public health perspective future studies
  need to be done in more diverse settings with
  improved methods such as isolating taxable sales
  specific to restaurants only.
• From a purely scientific perspective, future
  studies should examine individual level data by
  looking at actual sales over time before and
  after a smoke-free law.

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FOR MORE INFORMATION

• http//www.tobaccoscam.ucsf.edu/target/index.cfm
  - website targeted toward restaurant owners
• http//www.vctc.org.au/publ/reports/Hospitality_pa
  per_summary.pdf for summary of all reports on the
  economic impact of smoke-free policies in the
  hospitality industry.