All human activities carry costs that have to be weighed against their benefits. Risk to limb or life is merely a type of cost that will occur with a probability lower than one but higher than zero. Why does the state try and persuade individuals to quit smoking, but not skiing? Why do we hear about the “social cost of smoking” – $130 billion per year in the U.S., according to a 1998 Treasury study – but not about the social cost of driving or swimming? What do we mean by “social cost”? We shall see that, on these issues, economists generally arrive at conclusions opposite to those of the Public Health approach – i.e., the approach of the medical specialists and government organizations of which we hear so much in popular discourse and the media.
