velveeta = still gross

Kraft is finally going to split off from Altria (aka Phillip Morris USA). According to the NYT, Altria and Wall Street expect this to offer yet another boon to the morally bankrupt individuals and ethically compromised mutual funds that invest in Big Tobacco. The NYT and tobacco PR execs took the opportunity to explain why tobacco, as an investment vehicle, is basically impervious to government regulation, litigation, public opinion, and health concerns. David Adelman of Morgan Stanley noted that "people like to smoke...it's enjoyable and there's not an alternative product."

Well...that's just because you can't (yet) sell stock in living an extra 10 years. But, with all due respect to Adelman's market savvy, I don't agree that there's not an alternative product, and frozen dinners provide a poor analogy. For one thing, frozen dinners aren't just about food cost, they're about storage convenience, shelf-life, and preparation time. If frozen dinners become too expensive, people will certainly switch to another product, but only if it also possesses those other key characteristics.

It's the same with cigarettes. There's more too them than nicoteine delivery, obviously. There's a ritual/habitual aspect, and a social cache as well. I don't smoke, so that's just what I observe, but there may be (there likely is) even more there. Saying that there isn't an alternative product seems simplistic to me. To me, the market elasticity of cigarettes (that people will buy them regardless of price hikes) does less to demonstrate their addictive quality than it does to dramatize these intangible aspects. So, two conclusions:

1) I believe the addictive nature of cigarettes, as well as their other characteristics, could well be replicated in an alternative product.

2) The elasticity of cigarettes may be due in part to a hidden cost that hasn't made its way into public consciousness. Forget about the eleven minutes you lose each time you smoke -- getting treatment for heart disease or lung cancer is expensive.

Also a fun fact from the NYT article: I'd never heard of this Vice Fund before, but if you check out their website, it's pretty entertaining. Like they specifically set out to see how much morally reprehensible ideology they could cram into one website. Blech.