Hannegan’s Letter & Pakko’s Casino Study

Bonus points to Hannegan! He posted a comment on-line AND got it published in yesterday’s Letters column of the St. Louis Post-Dispatch. Hannegan contacted Chad Cotti, PhD., who has done similar estimates before, and got him to estimate the loss in employment in the restaurant and bar business if St. Louis City were to go smoke-free. Needless to say, it shows a large drop in bar employment, so once again scare tactics which would never be considered with another health threat, like asbestos exposure or food poisoning, are being used to argue against secondhand smoke legislation.

Incidentally, Cotti also published a study concluding that smoke-free air laws led to more drunk driving fatalities because smokers would drive further to be able to smoke and drink! [See his web page for a list of smoking-related articles including: “Drunk Driving After the Passage of Smoking Bans in Bars” Journal of Public Economics: Vol. 92, Issues 5-6, June 2008: 1288 -1305 (with Scott Adams).]

Here’s Hannegan’s letter:

Pushing unemployment?

Dr. Chad Cotti, a University of Wisconsin economist who specializes in assessing the impacts of smoking bans, has predicted the probable effect of a St. Louis city smoking ban on St. Louis city restaurant and bar employment. Dr. Cotti estimates that the St. Louis City Smoke Free Air Act of 2009 would cut St. Louis city full-service restaurant employment 1.1 percent and bar employment 19.7 percent. Dr. Cotti says that such a large employment drop in the bar industry would be the result not only of layoffs but also the complete closure of some establishments.

Obviously laid-off workers don’t pay the city’s earnings tax and closed bars cease their tax contributions to the city. Why are Alderman Lyda Krewson and Mayor Francis Slay pushing such an economically harmful restriction on businesses — especially at a time when the city is so cash-strapped that 4,000 city employees may soon be asked to take unpaid furloughs and basic city services are being threatened?

Bill Hannegan — St. Louis
Keep St. Louis Free

As I noted in my blog of June 3, I found a recent study on-line “Smoking bans do not cause job losses in bars and restaurants” which disputes the conclusion that smoke-free air laws lead to such loss of business. Lead author of the study, Dr. Elizabeth Klein, assistant professor of health behavior and health promotion at Ohio State University, is quoted as saying:

“In the end we can say there isn’t a significant economic effect by type of clean indoor air policy, which should give us more support for maintaining the most beneficial public health policies.”

Earlier today I visited Hannegan’s blog “KEEP ST. LOUIS FREE! [to pollute your lungs]” and found not only the above letter mentioned but also a link to a new “working paper” by two economists at the Federal Reserve Bank of St. Louis website, posted at http://research.stlouisfed.org/wp/2009/2009-027.pdf

The study is titled: “Casino Revenue and the Illinois Smoking Ban” and its authors are economists Thomas A. Garrett and Michael R. Pakko. It purports to show significant loss of casino revenue directly tied to the Illinois Smoke Free Air Act, which went into effect January 1, 2008.

This is not an officially approved document but by being published on the Federal Reserve website it gives it plenty of credibility. Also, since it’s a “working paper,” it’s not been peer reviewed or published in a journal.

I debated Dr. Michael Pakko, a Libertarian, in St. Louis earlier this year at the event staged by the St. Louis Federalist Society on whether or not St. Louis should go smoke-free. He’s been speaking out against smoke-free air efforts for several years now, presumably motivated by the Libertarian philosophy of minimal government.

The study by Garrett and Pakko is interesting because Missouri GASP has been funding an independent study into this same subject by Jenine Harris, PhD., Assistant Director of Research, Center for Tobacco Policy Research at Saint Louis University School of Public Health.

Her study will compare the impact of different state smoke-free air laws on casino revenues in the adjoining states of Missouri, Illinois and Iowa. Dr. Harris is currently attending the three-day National Conference on Tobacco or Health, Phoenix, AZ, a major tobacco control conference, to report her findings to date under the title “Gambling on clean air: Casinos and the Smoke Free Illinois Act.” [Go here to view conference information and a very effective video.]

10 responses to “Hannegan’s Letter & Pakko’s Casino Study

  1. After a year and a half of experience here in Chicago, now that the fanfare has worn off and the lobbyists have moved on to other states, it’s clearly obvious that trying to ban smoking in small neighborhood “shot and beer” bars is pretty useless. Many small bars in my area ignore the ban to keep their customers, neighbors, and local police (many are patrons when off duty) satisfied. In areas where real crime is an issue, the problem of undesirables being attracted by groups of people outside the bars and causing disturbances on the PUBLIC street, property that the owner has no control over, outweighs the issue of people peacefully smoking inside a bar, bothering absolutly no one, Chicago did not repeal the ordinance that prohibits people from congregating outside the bars. All of the complaints are from neighbors of bars that comply. It’s fading into history in many small neighborhood bars. The only places it becomes an issue seems to be in rural areas where local police have little to do except visit local bars and monitor their parking lots, the larger “company” bars downtown, and those in “trendy” areas with a high turnover of patrons.

    • I really have no experience of the situation in Chicago. I don’t know if anyone else has reliable information or can rebut your comments.

      Since writing the above I’ve pursued this further and on June 16, 2009, learned from a reliable Illinois source that all complaints go to the Illinois Department of Public Health [IDPH] and quite a few are totally bizarre. It’s not usually the police upholding the law, it’s generally the local public health dept. The process is completely complaint-driven so maybe nobody has complained about the bars in question.

      IDPH also believes that some complaints, many of which are anonymous, are one bar complaining about another to harass a competitor.

      IDPH compiles complaints and then distributes them to the local health department to pursue. The response by the health department is graduated, with an inspection only after the third complaint.

  2. Charley Gatton

    Sorry, I haven’t read Cotti’s report. My experience with economists is that, like the old joke, if you put 5 of them in a room and ask for a forecast, you’ll get at least eleven mutually exclusive reports.

    My statistics classes were a long time ago, and called Management Science back then (I was a business major), but I learned about the fallacy of trying to do an analysis with only one variable – it almost never reflected true life. A great many factors have had impact on casinos, bars, and restaurants. For example, the Illinois law took effect at about the same time as Lumiere opened. I’ve never seen a report from the pro-smoke group that mentions that fact. I have a least a smidgen of a suspicion that there was an impact. And anything including the last 12 months – have any of these guys noticed we have a major recession going on? Disposable income is what fuels casinos and bars, and disposable income is what people are being very careful with these days.

    Their latest tactic is to poo-poo studies not performed by economists, apparently feeling that public health professionals can’t count or use a computer. That’s because of people like Cotti and Pakko. Of course, if an economist disagreed with them, there would be some other reason.

  3. Mr. Pion, does the Federal Reserve Bank “officially approve” any of the studies conducted by their research economists which appear on both the website and in the Regional Economist? Why single out Pako’s study?

    • Mr. Hannegan, I singled out this study because it relates to secondhand smoke and I noted that it had not been published in a reputable peer-reviewed journal. The latter gives added weight to an article’s validity (although it doesn’t guarantee it), so I believe the comment is justified.

  4. Shock! another Smoke free group censors their site
    June 15, 2009 · No Comments

    This was posted on my about page.

    “You posted to the mogasp blog but your post was incomplete. For me to consider it please complete and resubmit, but I make no promises in advance about approval. Thanks. Martin Pion.

    Since he decided not to post my response I will post it here.

    Here is an excellent rebuttal of the Klien (mogasp: the author’s correct name is “Dr. Elizabeth Klein“). study.
    audio

    When it comes to the harm done to charitable gambling that has been proven time and time again.
    http://kuneman.smokersclub.com/PDF/MNsmokingbanstudy.pdf
    The bottom line is that the only studies that show no economic harm were those done by tobacco control. The one done by Kline (sic) did not show anything economic. Just raw employment data. Not whether it was full time or part time or whether their tips went up or down just how many people were employed. It ignores the fact that this study was done In Minnesota and over three hundred bars went out of business as a result of the ban. Just in the Mall of America there were fifteen bars and they all went out of business as a result of the ban.

    As far as your post on my website.

    “You posted to the mogasp blog but your post was incomplete. For me to consider it please complete and resubmit, but I make no promises in advance about approval. Thanks. Martin Pion.”

    I do not censor my site, I also will let you know that I am a member of Ban the ban Wisconsin. I and we are willing to allow dissenting opinions and are willing to defend our position until hell freezes over. We do not have to censure (mogasp: he means “censor”) our site. We present the facts and let the public decide. Hannegan presents the facts. You might not like the facts but they are there for everyone to see. The facts are that you people can not prove one single death caused by second hand smoke. All you have is very weak statistics based on lifestyle surveys. Now how many ex smokers claim to be never smokers just because groups like yours made them out to be the pariah of society? Also since when did the government get to make a minority second class citizens and tax them as such? Can you show any justification to force smokers to pay for non-smokers health care through the S-CHIP? There is no way that you can justify that theft through taxation. You can censure (sic) my post and that is fine. I am use to that from tobacco control. I will say that your censorship will speak a thousand words and I will pass it on to every group that believes in the freedom of choice!!

  5. Here is an excellent rebuttal of the Klien (MP: actual spelling “Dr. Elizabeth Klein”) study: [click for audio]

    When it comes to the harm done to charitable gambling that has been proven time and time again: http://kuneman.smokersclub.com/PDF/MNsmokingbanstudy.pdf

    The bottom line is that the only studies that show no economic harm were those done by tobacco control. The one done by Kline (sic) did not show anything economic. Just raw employment data. Not whether it was full time or part time or whether their tips went up or down just how many people were employed. It ignores the fact that this study was done In Minnesota and over three hundred bars went out of business as a result of the ban. Just in the Mall of America there were fifteen bars and they all went out of business as a result of the ban.

    As far as your post on my website.

    “You posted to the mogasp blog but your post was incomplete. For me to consider it please complete and resubmit, but I make no promises in advance about approval. Thanks. Martin Pion.”

    I do not censor my site, I also will let you know that I am a member of Ban the ban Wisconsin. I and we are willing to allow discenting (sic) opinions and are willing to defend our position until hell freezes over. We do not have to censure (MP: really means “censor”) our site. We present the facts and let the public decide. Hannegan presents the facts. You might not like the facts but they are there for everyone to see. The facts are that you people can not prove one single death caused by second hand smoke. All you have is very weak statistics based on lifestyle surveys. Now how many ex smokers claim to be never smokers just because groups like yours made them out to be the pariah of society? Also since when did the government get to make a minority second class citizens and tax them as such? Can you show any justification to force smokers to pay for non-smokers health care through the S-CHIP? There is no way that you can justify that theft through taxation. You can censure (sic) my post and that is fine. I am use to that from tobacco control. I will say that your censorship will speak a thousand words and I will pass it on to every group that believes in the freedom of choice!!

  6. Hi Martin,
    Been a real fan of you and Bill here for some time. I can always rely on a spirited exchange. I thought I’d log on to pass on some news from Colorado where your Pueblo miracle occurred some years ago:
    http://bikeportland.org/2010/06/25/safety-concerns-prompt-biking-ban-in-colorado-town/
    I guess taking a page or two out of your playbook has paid off for public safety. About time they get those two wheeled road hazards off the tarmac. I guess that pristine air from Colorado will soon waft eastward and motorists can feel that much more secure here too.
    You watch out for buses, ya hear!

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