Effectiveness of warnings on cigarette packs

First published in The Korea Herald.

As expected, South Korean tobacco-makers and retailers have expressed their opposition to the Health Ministry’s new antismoking policies, which require all firms to fix health warning illustrations on their cigarette products. However, the ministry is not being swayed by their arguments and has refused to stand down.

The new measures, which will be implemented later this year, require health warnings consisting of text and images to be printed on the top 50 percent of the front panels of all cigarette packets. In addition, retailers have to display the front panel bearing the warning graphics to customers.

The graphics have to show tobacco’s harmful effects as well as health conditions that may be triggered by heavy smoking, including heart disease, lung cancer and possible birth defects.

The tobacco lobby claims the government is interfering with their rights to product design, as almost all cigarette packs will look more or less identical.

Dismissing their arguments, the Health Ministry has said that some 80 countries overseas require cigarette products to have warning illustrations, and of them, 63.8 percent make it mandatory for the warnings to appear in the upper portion of the packs.

From an economic standpoint there are many questions that need to be asked in this tug-of-war.

Have warning graphics discouraged smokers?

Have these policies affected the revenues of tobacco-makers in countries where this policy has been implemented?

What has been the economic impact on tobacco firms?

According to a recent report by the U.S.-based nonprofit organization Campaign for Tobacco-Free Kids, despite the numerous public reports on the risks of smoking, studies show that a large number of smokers have inadequate knowledge of the health effects of smoking.

“While some smokers generally know that tobacco use is harmful, they underestimate the severity and magnitude of the health risks and tend to perceive other smokers to be at greater risk for disease than themselves,” it notes

Knowledge of the health risks of smoking is even lower among people with lower income and fewer years of education because of limited access to information about the hazards of smoking.

Therefore, health warnings on cigarette packs have been found to inform smokers about the health hazards of smoking, encourage smokers to quit and prevent nonsmokers from starting to smoke.

Studies by the International Tobacco Control Policy Evaluation Project, an international cohort study that surveys adult smokers in 19 countries, provides much of the evidence base for health warnings.

According to ITC research, adult and youth smokers report that large, comprehensive warnings reduce smoking consumption, increase motivation to quit and increase the likelihood that they will remain abstinent following an attempt to quit.

It shows graphic warnings are more effective than text-only warnings in leading people to think about quitting and deterring them from having a cigarette.

Further, ITC studies of smokers in Australia, Canada, the United Kingdom and the U.S. revealed that graphic warnings are more effective than text-only warnings at making smokers think about quitting and deterring them from having a cigarette, and that larger, pictorial warnings are associated with increased quit attempts.

Evidence from Canada, the first country to implement graphic warnings, shows that after controlling for price, graphic warnings significantly decreased the odds of being a smoker and significantly increased the odds they would try to quit.

After Singapore introduced their graphic warnings in 2004, 28 percent of smokers surveyed reported smoking fewer cigarettes because of the warnings; 14 percent of the smokers surveyed said that they made it a point to avoid smoking in front of children; 12 percent said that they avoided smoking in front of pregnant women; and 8 percent said that they smoked less at home.

Since Thailand introduced their second set of pictorial labels in 2006, 44 percent of smokers said the warnings made them “a lot” more likely to quit over the next month.

In Brazil, after the introduction of new graphic warnings in 2002, 67 percent of smokers said the new warnings made them want to quit.

Given this, the Korean Health Ministry may be right to conclude that these measures will be effective in South Korea, home to almost 10 million smokers, where an estimated 57,000 die every year due to smoking-related diseases.

According to the World Health Organization, warning labels on tobacco products constitute the most cost-effective tool for educating smokers and nonsmokers alike about the health risks of tobacco use.

“In many countries, more smokers report getting information about the health risks of smoking from warning labels than any other source except television,” it notes.

Countering the claims by tobacco-makers, it says, “For decades, the tobacco industry has taken advantage of the package as a venue for creating positive associations for their product. The use of graphic pictures is an important means of replacing those positive associations with negative associations, which is far more appropriate given the devastating impact of tobacco products on global health.”

All these arguments seem valid, and if true, the tobacco-makers will certainly see a dent in their revenues once the policy is implemented.

However, I am not really convinced that it will lead to a dramatic fall in the number of smokers in Korea.

In 2014, the National Assembly approved an 80 percent increase in the price of cigarettes, from 2,500 won ($2.17) per pack to 4,500 won, in an effort to curb smoking. The new bill took effect on Jan. 1, 2015.

While in the initial few months, there was a decline in the revenue of tobacco-makers here -- as many smokers started experimenting with e-cigarettes -- it was short-lived, and the revenues have again increased a year later. The only beneficiary has been the government, whose tax kitty has swelled.

As noted by Maastricht University researchers in a recent article in Health Psychology Review, “Scary graphic warning labels are a popular tool among policymakers, but there is no clear consensus within the scientific community regarding their efficacy.”

The researchers looked at an initial selection of 295 publications exploring “fear appeals,” including graphic warning labels, then eliminated studies that had methodological problems.

“Not only is there little evidence that could support the use of graphic warning labels, but if you combine the evidence that is available, it turns out that at best, the use of graphic warning labels only has a small effect, while in the worst case, it may even backfire,” they noted.

It remains to be seen how the policy pans out in South Korea -- with a tobacco market widely perceived to be  demand ineleastic -- but my bet is in the long run it will make little difference.

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Tackle illegal political funding for sustainable growth

First published in The Korea Herald.

With the general election in Korea just a couple months away, a recent report by the Organization for Economic Cooperation and Development appears to be timely.

The report, “Financing Democracy,” takes a comparative approach to examining how the funding of political parties and election campaigns has evolved, and how regulations across OECD member and partner countries have been established.

From an economic standpoint, this is important because it shows how the politician-business nexus can hamper economic growth. As long as it continues to exist, vested interests will rule supreme, rather than national interests.

In particular, the report assesses the risks of policy capture through the funding of political parties and electoral campaigns, identifies regulatory loopholes and implementation gaps in existing policies, and suggests a comprehensive approach to integrity, including issues such as lobbying and conflicts of interest.

Korean policymakers, in particular the National Election Commission, could do well to heed the recommendations the report makes. They should particularly focus on the cross-country comparison, as it features detailed country case studies of Canada, Chile, Estonia, France, Korea, Mexico, the United Kingdom, Brazil and India -- providing in-depth analyses of their political finance mechanisms and challenges in different institutional settings.

As the report notes, money in politics is a double-edged sword. It is a necessary component of the democratic process, enabling the expression of political support as well as competition in elections.

“Yet, the increasing concentration of economic resources in the hands of fewer people presents a significant threat to political and economic systems. If the financing of political parties and election campaigns is not adequately regulated, money may also be a means for powerful special interests to exercise undue influence, and ‘capture’ the policy process,” it notes.

For example, access to public procurement has been used by elected officials to “return the favor” to corporations that have made significant contributions to their campaigns or to exclude those that supported their opponents. While high-spending areas such as infrastructure and urban planning are particularly vulnerable to the risk of policy capture, any policymaking process can be a target of powerful special interests.

This sort of leverage has always been used in Korean elections, and to a larger extent in presidential elections. That the Four Rivers Restoration Project and energy diplomacy bulldozed through by former President Lee Myung-bak were mired in corruption immediately comes to mind.

The OECD report points out that countries’ experiences have revealed that several shortcomings still exist and are vulnerable to exploitation by powerful special interests.

Many countries struggle to define and regulate third-party campaigning in particular, to prevent the rechanneling of election spending through supposedly independent committees and interest groups.

At the moment, only a few countries, such as Canada, Ireland, the Slovak Republic, the United Kingdom and the United States have regulations for third-party campaigning. Significantly, Korea is missing from the list.

While Korea bans all anonymous donations to political parties, the information disclosed needs to be organized in an intelligible and user-friendly way to facilitate effective public scrutiny. Civil society organizations and the media can only be effective watchdogs if substantive political finance information is publicly available for their analysis. That is not the case here.

It is essential to tighten lobbying standards for sustainable and broad-based economic growth. While disclosure of private interests by decision makers is widely adopted by countries to manage conflict-of-interest situations and identify suspicious financial flows in public decision-making, verification and auditing of disclosure forms are not strictly practiced, more so in Korea.

As the report notes, since being enacted in 1965, the Political Fund Act in Korea has undergone 24 revisions for the purpose of guaranteeing the fair provision, and transparency, of political funds. The term “political funds” is defined as money, securities or goods provided to persons engaged in political activities, including political parties, in addition to expenses that they need to undertake political activities, including elections.

With the aim to guarantee the proper provision of political funds, secure the transparency of political funds and contribute to the sound development of democratic politics by preventing illegal political funding, the act lays out many basic principles.

In August 2005, the National Assembly revised the act so that all corporations and groups were fundamentally prohibited from making political contributions with the aim of initiating political reforms and addressing problems with illegal political funds.

However, is it strictly followed? It appears not, going by the regular news of slush funds by corporate honchos and raids by prosecutors.

Under the act, any political party may collect party membership fees. However, it does not set an upper limit on the fees that may be paid by an individual political party member.

When an association that raises political funds for a National Assembly member or a candidate to run in an election for public office submits a financial report, it is required to disclose the personal information of donors who make contributions exceeding a set amount. This rule is often flouted in Korea.

According to financial reports submitted by political parties in 2015, the total membership fees collected was $52 million, 25.8 percent of their total income of $201.3 million. South Korea’s ruling Saenuri Party collected $26.4 million in membership fees, which made up 27 percent of its total $97.6 million income. The main opposition New Politics Alliance for Democracy party, now renamed The Minjoo Party of Korea, collected $21.2 million, making up 23.1 percent of its $91.7 million total income.

Since it was not an election year, the external funding for campaigning has obviously not been included. However, elections are due in April this year, and there will obviously be more funding details available at the end of the year.

Unlike Western political parties, party membership fees in Korea are too insignificant to be of importance for political party financing. It is no secret that the candidates receive massive funding from outside sources and under the table.

In the current context of economic crisis, there is a need for more transparency in public life. Particular attention should be paid to risks to the independence of political actors and public office holders as well as risks of conflicts of interest, even undue influence and corruption, related to money in the political sphere.

Political finance disclosure combined with adequate enforcement capacities has been recognized by international standards as a key policy instrument for promoting effective transparency and integrity in party and campaign financing. It is time the authorities in Korea started enforcing existing rules, and if necessary tightened the rules with regard to corporate funding of political parties.

The lack of transparency in political funding in Korea poses alarming risks of corruption. This is because private contributions effortlessly turn into a conduit for buying favors.

The current law punishes violators of political funding more severely, but the president’s special amnesty powers have long been abused. Many politicians and businessmen convicted of political funding fraud have been pardoned by whichever president is in power.

More transparent, competitive and realistic election campaign funding management is a must for the development of democracy. It will go a long way in ensuring the sustainable and broad-based economic development of Korea, which will propel it to an advanced-nation status.

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