As a child my father was coerced into attending services at a Baptist church in rural Arkansas. Although the Baptist theology didn't stick, my father held memories of the church services for the rest of his life. In particular, he remembered how his grandfather, Mack, reacted to one of the preacher's sermons.
On most Sundays the preacher would remind the congregation of the various sins to be avoided. The regular list included dancing, card playing and whiskey drinking. Because Mack didn't partake in any of these vices, he was generally comfortable with the preacher's sermons.
However, one hot summer Sunday the preacher expanded his list. As the women cooled themselves with pasteboard fans printed with scripture verses and the men dabbed sweat with handkerchiefs, the preacher started to hold forth on the evils of chewing tobacco. This surprised and provoked Mack because he was never seen without a chunk of Red Man tobacco in his cheek. He stood up, looked the preacher in the eye, and said, "Preacher, you done stopped preaching and started meddling." With that, he walked out of the church.
Preachers aren't the only folks who have strong opinions about human behavior. Economists freely offer opinions on how to influence the choices that people make with an eye toward increasing societal well-being.
During the first half of the 20th Century, the Cambridge economist Arthur Cecil Pigou was an advocate of using taxes to motivate people to refrain from consumption patterns that were deleterious to society. Economists refer to such taxes as Pigovian taxes.
Consider one straightforward case of a Pigovian tax. Most people now understand that cigarette smokers not only harm their own health, but their secondhand smoke spills over onto others. Numerous studies have documented the harmful effects of secondhand smoke. As one example, the Centers for Disease Control and Prevention (CDC) reports that nonsmokers who are regularly exposed to secondhand smoke increase their lung cancer risk by 20 to 30 percent.
Pigou's remedy for this situation would be to reduce cigarette smoking by imposing a tax on cigarettes, and this is exactly what society has done. Utah increased the tax on cigarettes in July 2010 from $.70 to $1.70 a pack, an increase of 243 percent. That tax is still imposed. Several states have cigarette taxes that exceed $3.00 per pack.
Studies indicate that these taxes do, indeed, reduce smoking. The greatest reduction is among adolescents and teenagers. This is important because those who do not acquire the smoking habit during their teen years are likely to avoid the habit for the rest of their lives.
In another arena, the CDC advocates increasing alcohol taxes to reduce deaths from drunk driving. The CDC's position is based on numerous studies that find that taxing alcohol does reduce consumption.
Many policy analysts feel that Pigovian taxes should be used far more frequently. In particular, there is growing support for higher taxes on gasoline to reduce carbon emissions. The list of those supporting a Pigovian tax on gasoline range from conservative economist, Gary Becker; to businessman and politician, Michael Bloomberg; to liberal economist, Paul Krugman; to conservative jurist and federal judge, Richard Posner; to physicist Steven Chu; to Time magazine journalist, Joe Klein.
Even though it can be demonstrated that greater use of Pigovian taxes would benefit society, such taxes are politically unpopular. Why? The answer is found in my great-grandfather's reaction to the preacher. If you try to impose a tax on something a person enjoys, that person is likely to view the effort as pointless meddling.
States have been able to tax cigarettes because 80 percent of the population never buy cigarettes. It is fairly easy to convince the 4 out of 5 adults who do not smoke that they should impose a tax on the smoker. On the other hand, the majority of the adult population drive automobiles every day, so a gas tax is far less popular.
This presents a dilemma. The greater the number of people engaging in an activity that creates harmful effects for others, the greater the overall harm imposed on society. Automobiles create a serious air quality problem because so many people drive so many miles. On the other hand, the opposition to taxing a particular activity is directly proportional to the number of people who will pay the tax.
Yet, one of the central reasons the country relies upon representative democracy is the belief that elected leaders are capable of making wiser decisions on critical policy issues than a plebiscite.
The Baptist preacher didn't stop preaching because some of his opinions irritated the congregation. He stuck to his convictions.
Likewise, in the case of considering policy tools such as the Pigovian tax, society would benefit if political leaders were guided by making good policy rather than choosing what is politically opportune.