Abhijit Speaks :

I have this rather odd habit of calculating costs of everything and some of such things that I have indulged in, include – cost per kilometer of running for my Nike shoe or cost per skip of the skipping rope that I bought for 140bucks and so on. This time around I am looking at one more such thing – The Cigaretter.

Government of India, recently imposed a ban on smoking in public places and it seems that their initial enthusiasm is commendable. Somehow, I guess I was early on this as well and I have stopped smoking (please note: I didnt use the word “quit” smoking) a week or so before that, thanks primarily due to a sore throat and continued this to get my health back on track.

However, I started thinking about another aspect of smoking that I have never read in popular literature. I have seen enough being written about smoking and its effects on health, it being a cause of cancer and heart diseases etc., while I do not have any particular agreement on this, I don’t have an agreement against it as well. But I’d keep this side aside for the time being. I am looking at the economic rather monitory aspects of it -

1. I have been smoking for almsot 10 years now, give and take a year. When I back calculated this, it means I have smoked close to 12000 cigarettes (assuming 300 smoking days in a year and an average of 5 cigarettes in a day and applying the final 20% hair cut to it.) So assuming there are a million smokers like me ( a very small number indeed), it means over this period all of us together have contributed to the topline of ITC by  roughly 2500 Crs. (considering 2Rs is what ITC gets per cig. over these years). I think this alone is a startling number.. 2500Crs. (to give a perspective, Tata Nano investment in Singur was less than this number). 2500 Crs can create a 1000 MW power plant? In short, if one is considering to start smoking, first he/she should buy the shares of the company whose brands he/she intends to smoke, I guess the dividends earned will atleast partially cover the cost and in all fairness he/she deserves it.

2. Now let me come to personal side -  Assuming the average cost of a cigarette over this period was 3Rs (for me) and usually each cigarette is associated with a chai (almost always) costing average of 2 Rs, the total cost per cigarette is 5Rs. which leads to an expense of 625 Rs. pm. (5Rs * 5 per day * 25 days) calculating the Time Value of Money for this annuity with an interest rate of 7% pa(roughly the average rate of inflation over these years), compounded monthly,  the sum comes to 108178 Rs. In short this is a single largest expense I have incurred in my life. To give another perspective, I have a personal collection of about 100-200 books. The total cost of these books including the TVM is less than a third of this cost.

Please note that – I am not making a point that smoking is bad or something, (if great people like Mark Twain and Einstein used to smoke, it can’t be an incredibly dumb thing to smoke). So health aspects apart – one should consider this monetory side of smoking. This does not mean – I’d quit smoking or anything but this will play heavily on my mind if and when I light the next butt.

While, I have used this argument on smoking this argument applies to everything that does not provide a great health benefit or a lasting effect, but which we keep doing over and over again without thinking about the costs (eg. SMS spamming is one such thing).