Unintended Consequences of NYC's Cigarette Tax

For many years I have noticed smokers exchange cigarettes with strangers merely by being asked. To either "bum a smoke" from a smoking stranger or give one to someone who approaches seemed to be a natural part of smoking culture. This exchange that I once heard sums up the rationale for this familiarity among strangers:

Person 1: Could I bum a smoke from you?
Person 2 (smoking): Sure. Here you go.
Person 1: Thanks.
Person 2: No problem. I know it's coming right back to me later.


By exchanging what had been inexpensive cigarettes, smokers paid in and withdrew from a floating circle of goodwill without anyone keeping track of their standing in this balance of payments among strangers.

Now, with cigarettes at $7 per pack (officially) a different dynamic emerges in NYC. I now see smokers approach with $0.50 in change in their hands and rather than "bum" they offer to "buy a smoke".

In the current model:
1 pack cigarettes = $7. At 20 cigarettes to a pack, 1 cigarette = $0.35. A premium is applied (plus it is less unusual to offer $0.50 than $0.35) and the cigarette is bought.

In the old model:
1 pack cigarettes = $4. At 20 cigarettes to a pack, 1 cigarette = $0.20. Applying the same premium as above, a single cigarette should have been purchased for $0.29, but instead they were given freely.

What a difference $0.21 makes. Cigarette price increases led to a transaction based exchange. I would guess that less goodwill and kind words are exchanged among strangers in this scenario. (I am told, however, that the $0.50 is not always accepted and cigarettes are sometimes still to be had for free.)