Smoking is a disastrous habit. According to a study in the British Medical Journal, each cigarette you smoke reduces your life by 11 minutes. In total, smoking makes you live 6.5 years less on average than a non-smoker.
To this well know health cost also comes a financial cost. In this article, we propose to study the real financial cost of smoking. By real here, we do not simply mean the actual price smokers pay for their cigarettes but also the cost of opportunity. Money for cigarettes is lost anyway; it could have been invested in stocks to produce interest over the years.
We will suppose that we have an average French smoker. According to the OFDT, in 2018, this smoker smoked an average of 13 cigarettes a day. Note that this number varies between men and women and tends to decrease. Therefore, the numbers we will give later are likely to be underestimations.
We consider in our experiments the variation of the annual average price of a cigarette pack in France. You can find the data here. The prices increased a lot during the last three decades, partially due to France’s high taxes.
For the investment strategy, we choose the most straightforward option: S&P500. We consider that we have a non-smoker who buys S&P500 stocks every time a smoker buys a cigarette pack. This is an approximation, as the price of a pack might not cover the cost of a stock. We also ignore taxes that might apply to your gains.
The results of the experiments are shown in the following figure. In red, you can see what an average smoker spent over 30 years smoking 13 cigarettes daily. In blue, you have what a non-smoker would gain by investing in S&P500 the money they would otherwise spend on cigarettes.
After 30 years, our average smoker lost nearly 40k euros. This represents around 2.5 times the minimal annual wage in France (~16,200 euros) and 1.8 times the median annual wage (~22,200 euros). This comparison is essential as poorer people smoke more than rich people (see the Baromètre de santé publique France).
On the other hand, our non-smoker ends up with 105k euros, despite four periods of recession (Dot-com bubble, subprime crisis, COVID, and war in Ukraine). This is 6.5 times the minimal annual wage and 4.7 times the median annual wage. Using this money, you could have retired earlier. It means that, by smoking, you live 6.5 years less and you work 6.5 years more. 13 years gone.
If we consider a heavy smoker who smokes a pack a day (20 cigarettes), we end up with a final investment after 30 years of 163k euros. 10 times the minimum wage.
In conclusion, smoking is a bad idea from a health and financial point of view. Consider instead investing your money regularly and wisely, as interest rates compound exponentially.
The code used to run the experiments is fully available on Github.