Tobacco Spending
I came across this report at the Bureau of Labor Statistics, titled (tantalizingly) "Tobacco Expenditures by Education, Occupation, and Age." (Mark Vendemia 2005)
I was struck by the figures. Although information about the ill-effects of tabacco is more prevalent today than ever before, people continue to spend vast sums of money of tobacco products. In 2002, the average expenditure per consumer unit [1] was $320, which is 25% more than the $255 dollars spent in 1996. At the same time, the price of tobacco related products went up by a staggaring 106% over the same period. Tobacco products are more expensive in the US than ever before and people are spending more money on them.
Sadly, poor people also spend more money on tobacco. People with a college education spend 1/2 as much as their peers without a college education. People with only a High School education spend $441 on tobacco.
When you get into the details of the numbers it gets worse. For those households that actually report tobacco expenditure, the average expenditure for the high school group is $1,453 per year. And, 30% of high school graduates with no college fall into this catagory.
Lets do some back of the envelope calculations to figure out what that is costing them over a lifetime. Say they start working at 18 and retire at 65, for a total working life of 47 years (which may not be the average, to be fair). That hypothetical household would spend $68,291 in cash. Say they were to invest that money in the S&P500 every year; at age 65, they could expect to have $1,551,122.87, if they made monthly contributions and the market averaged 10% over that period, which is actually below its historical average. Therefore, some of America's poorest households (smokers without a college education), would be millionaires if they invested their money rather than burned it.
Why don't we teach kids that in school?
[1] (defined as a family household, or single independent person, or a household in which unrelated members share expenditures)
I was struck by the figures. Although information about the ill-effects of tabacco is more prevalent today than ever before, people continue to spend vast sums of money of tobacco products. In 2002, the average expenditure per consumer unit [1] was $320, which is 25% more than the $255 dollars spent in 1996. At the same time, the price of tobacco related products went up by a staggaring 106% over the same period. Tobacco products are more expensive in the US than ever before and people are spending more money on them.
Sadly, poor people also spend more money on tobacco. People with a college education spend 1/2 as much as their peers without a college education. People with only a High School education spend $441 on tobacco.
When you get into the details of the numbers it gets worse. For those households that actually report tobacco expenditure, the average expenditure for the high school group is $1,453 per year. And, 30% of high school graduates with no college fall into this catagory.
Lets do some back of the envelope calculations to figure out what that is costing them over a lifetime. Say they start working at 18 and retire at 65, for a total working life of 47 years (which may not be the average, to be fair). That hypothetical household would spend $68,291 in cash. Say they were to invest that money in the S&P500 every year; at age 65, they could expect to have $1,551,122.87, if they made monthly contributions and the market averaged 10% over that period, which is actually below its historical average. Therefore, some of America's poorest households (smokers without a college education), would be millionaires if they invested their money rather than burned it.
Why don't we teach kids that in school?
[1] (defined as a family household, or single independent person, or a household in which unrelated members share expenditures)
posted by PWN at 3:23 AM
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