An old and important idea in economics is that certain socially harmful behaviours can be dealt with not through bans or regulation but through the price mechanism. By taxing so-called “negative externalities”, we can rely on prices and consumer choice to balance the harms and benefits of things like pollution, traffic congestion and carbon emissions.And so it is with smoking. It’s bad for people’s health and imposes costs on our healthcare system. But we also want to respect people’s choices. And prohibition doesn’t work. So a “Pigouvian” tax on tobacco is the right public policy response.Subscribe to gift this articleGift 5 articles to anyone you choose each month when you subscribe.Subscribe nowAlready a subscriber? Fetching latest articles