The Ban Of Smoking In Public Areas Economics Essay

The research question is What has been the economic impact on discotheque by the raising of the legal drinking age and the ban on smoking in public places in Mumbai. Im not covering entire Mumbai and focusing on the main areas where people visit, these areas are colaba, lower parel and bandra (west)

I chose this topic because I wanted to know how the nightclubs and the people staying in Mumbai got affected. I haven’t included the whole of Mumbai, but focused on three areas colaba, lower parel and bandra (west) .I determined two factors that affected the nightclubs and the people; these factors are namely the ban on smoking in public places and the rise in the legal drinking age. These factors fall under the category of demerit good. I read a newspaper article which led me to this research question [i] -” Bishnu Das, associate vice-president, TGIF., says, “The ruling is definitely going to affect the business for clubs and pubs in Mumbai. It’s sad. But honestly I don’t think it’s going stop people under 25 from drinking. They would only get more curious.” the article highlights showing that this is going to lead to an underground and illegal market and there will be an increase in the number of drinkers.

I HAVE TO WRITE ABOUT THE LAW OF DRINKING AND THE DATE THE LEGAL AGE INCREASED

This is another article that led me to have another demerit good in my research question [ii] “The Bling lounge at the Leela in Mumbai, which also run the famous discotheque Poison, is already feeling the heat. “There has been a 10-15 % fall of people coming in due to the smoking ban. It is a great cause for concern,” said one of the managers.”

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Farzad Birji, F&B manager at Gordon house, which runs the popular discotheque Polyesther, said: “People enjoy smoking while drinking. Guests are peeved that they have to come all the way down to the lobby and get out of the hotel to smoke.” This article clearly states that there is a decrease in the number of customers, a drop of 10-15%.

Smoking was banned in India on 2nd October, 2008 in various places such as lounges, public transport (cars, buses) and their transport area (railway stations, airports, bus stands) auditoriums, libraries, amusement parks, malls, Courts, banquet halls, pubs, offices and educational centres.

Smoking is also permitted in airports, restaurants, bars, pubs, discothèques and some other enclosed workplaces if they provide designated separate smoking areas. Anybody violating this law will be charged with a fine of INR200. 

Demerit goods are private goods with negative externalities that are considered socially undesirable. Negative externalities occur when the consumption of a good has measurable negative consequences on others who do not consume the good themselves.

The above two articles clearly show that the revenue of the nightclubs and other factors have been affected. The ban has affected the nightclubs so has the rise in the legal age to consume alcohol. I chose these three nightclubs because I visit these nightclubs frequently and seen many people visiting these nightclubs. Given the above statement I wanted to check if implementation of such laws had an impact on the revenue of the nightclubs. I will also touch on the rise of underground markets pertaining to the supply of alcohol and cigarettes.

Hypothesis-as the core idea of the essay is to find out the impact of the smoking ban and the increase in the legal drinking age on the revenue of the discotheque in bandra (west) Mumbai.

The revenue of the discotheque in bandra (west) Mumbai has decreased

After the ban on smoking in public places

The Raise in the legal drinking age

The ban on smoking in public places and the raise in the legal drinking age has caused high barriers to entry in this market (discotheque) in Mumbai.

Enforcement of the smoking ban in public places has reduced negative externalities.

Increase In legal drinking age has caused a decrease in a number of drinkers.

The above five hypothesis would be proved or disproved using graphical analysis, statistical tools and in comparison with assumptions.

Methology-

The given extended essay uses both primary and secondary data.

Primary data has been collected using a written questionnaire and oral interview. I’m not covering entire Mumbai, but covering the main areas where people visit, these areas are colaba, lower parel and bandra (west) Data was obtained from three nightclubs that are in each on the areas mentioned above; before and after the ban of smoking and from the increase in the legal drinking age. The data was also obtained from random people and through friends. The sample size for the primary data is 70.The age group focused on the youth and the working class basically from 18-30. Primary data is used for both qualitative and quantitative analysis.

Secondary data has been collected through the internet (e-newspapers), magazines and past records of the three night clubs in bandra (west) Mumbai.

Primary data and secondary data has been represented using bar graph, pie chart and column graph, the data has been analysed using mean, median ,mode, average revenue and marginal revenue. The economic theories pertaining this essay would be theory of market-demand and supply, theory of costs and revenues, theory of firms, market failure, positive and negative externality of consumption.

Analysis of data:

The various hypothesis is been analysed by the help of statistical tools, graphical representation and economic theories.

Age group-18 to 25

This graph is basically showing the different age groups, I have highlighted two age groups. The graph is showing the number of people who only drink, only smoke, do both and do none .the sample taken for the age group 18-24 is 40 and for 25-30 is 30.the graph is showing that smoking and drinking together is the highest ,this has reduced in the number of customers. HAVE TO WRITE ABOUT THE OWERS PERPECTIVE.This proves by hypothesis one (the revenue of the nightclubs has been reduced due to the implementation of these laws) The nightclub owners are giving entry to younger crowd, this younger crowd are the crowd that begun to indulge into alcohol, cigarettes and get addicted to it.The night club managers allow to increase their revenue

The graph is showing that there are more number of people drinking below the legal drinking age; this shows that there is an underground market formed. Secondary data has been taken from an article from the internet, that article states that [iii] Statistics from a recent survey by the social development foundation of the Associated Chambers of Commerce and Industry of India (Assocham) reveals that nearly 45 percent of 12th graders in metropolitan cities drink excessively at least five to six times a month.”

“Most of the teenagers turned to drinking for fun or under peer pressure. Over 32 percent drink when upset and 18 percent when they feel lonesome and depressed.

In addition, about 15 percent indulged in alcohol to curb boredom while 45 percent consumed liquor to “get high.”

“The researchers surveyed over 2,000 teenagers in the age group of 15-19 years across Mumbai, Kochi, Chennai, Hyderabad, Indore, Patna, Pune, Delhi, Chandigarh, and Dehradun.”

The article is showing us how many teens drink ,about 2,000 teens drink between the age group of 15-19.In my extended essay I have focused on the age groups from 18 to 30 ,I included this age group as I have seen that people of this age group going to nightclubs and indulging into alcohol. The age group specified above is below the age group I have taken ,people below the age of 18 are consuming alcohol which shows that there is The government increased the legal drinking age from 21-25 because there was a lot of alcohol consumption with that age group. The increase in the legal age to consume alcohol just made it worst and more and more teens are indulging into it.The government did not make sense by increasing the legal age to drink, different regions of India have different a different age to consume alcohol, example-in goa and Karnataka you can consume alcohol at the age of 18, in Maharashtra its 25 and wardha district its 30.around the world the legal drinking age is between 18-21 and in India its 25,the government wants Mumbai to be a hotspot for tourists ,but this has only reduced tourism as the tourists drink at an early age and when they come to Mumbai they cannot drink if they are not 25.many famous celebrities have also commented on the rise on the legal drinking age namely Amitabh Bachan, he says that [iv] “Bollywood superstar Amitabh Bachan tweeted that it is odd that Indians are deemed mature enough to vote and join the army before 25 but not drink. “At 23, Sid Mallya is GM and owner of the third largest liquor company in the world. But, guess what? It’s illegal for him to drink,” Bachan wrote. Mallya junior, who is actually 24, tweeted: “What’s this I hear that they’ve gone and bumped the drinking age up to 25?!!! That means I can’t get served for another year!!!!”

“Actor Imran Khan said, “It’s completely unfair to expect that one has to wait till 25 years to exercise his freedom of choice regarding one’s lifestyle. Young India is not as irresponsible as the older establishment assumes it to be.”

The celebrities are saying that its unfair for a person to wait till 25 to drink, Amitabh Bachan says that the owner of the third largest liquor company in the world cannot consume alcohol; he has to wait till he’s 25.

In my questionnaire I asked a question stating that ‘has the ban on smoking in public places and the rise in the legal age to drink alcohol reduced you or stopped you from drinking and smoking’. People answered saying that shops, nightclubs still serve alcohol and there is no fine charged if your caught smoking in public places. Some people said that they smoked front of the cops and they said nothing. This is just showing that the law has not been implemented properly and there has not been a reduction of these activities which the government wanted. The fine for smoking in public places is Rs.200; this is a small amount of money. I feel that the policemen should stop taking bribes, become stricter and the fine for smoking should be increased.

My second hypothesis states that – The ban on smoking in public places and the raise in the legal drinking age has caused high barriers to entry in this market (discotheque) in Mumbai.

I would support my hypothesis with quantitative and qualitative data. Nightclubs have high barriers to entry in Mumbai; the excise duty on alcohol has risen to reduce the consumption of alcohol. I read a newspapers article supports my point

v”Imbibing alcohol in the city has never been easy on the Mumbaikar’s wallet, and there will no forthcoming relief as the Maharashtra government has increased excise duty on all liquor, with the exception of wine. The state has increased the minimum rate of excise duty to Rs 95 per proof litre for country liquor, Rs 240 per proof litre for foreign liquor, Rs 33 per bulk litre for mild beer and Rs 42 per bulk litre for fermented beer.”

The article is saying that the excise duty on all alcohol is increased and this has caused a problem for many it shows that the price is hiked by almost double, this article is taken from a news article in the year 2011, in the beginning there was a reduction in the consumption of alcohol as in the same year the law was passed for the legal age to consume alcohol, the government increased it to 25 from 21.This did not make a difference as the consumption of alcohol is currently very high inspite of the law and high excise duty. The government basically rose the rates of excise duty as he wanted the consumption of hard liquor to reduce by people switching to soft liquor like wine and beer, the excise duty on wine is low and People have reduced going to nightclubs, pubs, bars and restaurants to drink because they charge very high due to excise duty, thus there is an increase in the consumption of alcohol through wine shops. To set up a nightclub there are many things requires and the cost is very high, the cost depends upon the area, licenses, security, dj, utilities (gas and electricity etc.), advertising, rent, insurance, guests, staff like bartenders, waiters, managers, a good retailer,

WRITE OWNERS VIEW permits and there can be additional costs like setting up a smoking section due to the ban on smoking in public places, lighting etc.

To start up a night club you will need a lot of financial support, the rates in your nightclub will show the amount of people visiting. The excise rate being high makes it difficult for nightclubs to lower their price on alcohol served, if the price is too low the nightclub will not cover its cost nor get any profits. This can be one reason why many nightclubs in Mumbai allow underage drinking. Teenagers and other younger crowd drink for the first time and don’t realise the amount they spend, there is a nightclub which I’m talking about allows underage crowd. That nightclub is namely tryst .this was one of the comments made by a person on tryst –

viWent to tryst for the first time last Wednesday with my wife and a few friends.

Heard a lot about the place from all. Was a complete let down 

1) so crowded that one couldn’t move and yes beware of being touched by sweaty people passing by. Lot of underage and drinking people were in the place. Management seems to give two hoots about authority.

2) Aircon non effective.

3) No rules followed: people were smoking everywhere without giving a damn. Bouncers were being a bit strict but after a token gesture the bouncers went away and people lit up any and everywhere. Can’t blame the bouncer’s, but rules as they are not enforced.

This comment shows that the rules and laws are not followed and this is increased in the consumption of alcohol among teens. This is a comment from one of the people who visited the club. Not necessarily it’s the clubs fault as people use fake I’d s to get into clubs. The clubs may be allowing younger people in to increase their revenue; this will cause some additional costs like paying the cops..

vii”More people in Maharashtra are buying liquor from wine shops instead of gulping down a few pegs in bars or permits rooms. 

The reason: high excise duty makes drinking in bars and restaurants a costly affair”

Last year’s steep hike has pushed alcohol prices up and brought down liquor sales in bars, say excise department officials and restaurant owners.

Thus my hypothesis is proved that nightclubs have high barriers to entry.

My third hypothesis states that “Enforcement of the smoking ban in public places like reduced negative externalities”

Negative externality is basically when the third party is affected which is not involved, example smoking takes place between the smoker and the cigarette, and the third party that is the passive smoker gets affected by the smoker without the participation of the passive smoker.in this hypothesis I’m showing how the ban on smoking has reduced negative externalities.

In my questionnaire I asked two questions relating to smoking

DOES THE BAN OF SMOKING IN NIGHT CLUBS CAUSE YOU INCONVIENCE? IF YES, HOW?

IF YOUR CAUGHT SMOKING IN A NIGHT CLUB, WHAT HAPPENS?

In the age group 18-24, about 6 people out of 40 do not smoke, and in the age group 25-30 about 5 out of 30 do not smoke, these people said that they were happy smoking was banned in a public places especially nightclubs, as nightclubs are a closed area, a lot of the smoke does not go out and these non-smokers get affected passively. According to the Non-smokers they get more affected then the people who are actually smoking, this is a proven fact; there was a study on

viiiCigarettes do not just harm the people who smoke. They also harm the people who are near cigarettes and breathe the smoke. Second hand smoke is the smoke that comes out of the lit end of a cigarette and that a smoker exhales (breathes out) about 53,000 people die from second hand smoke every year. When we breathe second hand smoke, we are breathing the same 4,000 chemicals a cigarette smoker breathes. 

Surprisingly smokers also say that the law has not caused them inconvenience because the law is not implemented properly, majority of the answers for the second question were ‘they tell you to go out and smoker’ and ‘they tell you to throw the cigarette’ .smokers say that these rules do not cause any inconvenience and after their told to throw an cigarette, they light another one. They haven’t been charged or anything and thus they do not fear to smoke again because they are not getting thrown out of the club for smoking.

ix”I, like several other people, snickered when they announced this ban simply 

because I didn’t believe it would be effective. This is a country which has no dearth of laws, rules and bans. The main reason these things don’t work out is that we don’t believe in respecting laws,” he says. 

“The term ‘public place’ isn’t defined clearly in this case. Does it mean the road? There isn’t much clarity, is there?” he questions, adding, “The only places that the ban was enforced for a few months were restaurants, pubs and bars.”

Rajesh Gopinath, an associate manager, notes, “I think the smoking ban was a good try, but it had very poor implementation.

These smokers and non-smokers even said that it’s not only clubs, they smoke everywhere and nothing has happened to them, this just shows that the law was passed on paper and nothing’s happening about it.According to the cops the people should understand themselves by not smoking breaking the law.

Given that many smokers don’t think twice about lighting cigarettes all across the City, the concept of the ban on smoking in public places can really be questioned. The authorities may say that all is under control – but there are still people smoking on the streets and open spaces like parks. 

The commissioner of police (law and order), T Suneel Kumar, comments, “The smoking ban doesn’t seem to be effective as the fine amounts that are imposed don’t really affect anyone. People are not bothered.”    He adds, “It can be made more effective if the fine is increased and awareness is created. At college levels, awareness programmes and respect for the legislature and its proceedings should be created.”

The fine charged for smoking in a public place should be raised which would make a difference. We cannot say that the fine will stop the smoking in public places immediately, but it will surely reduce the consumption of smoking in public places.

Many countries in the world have banned smoking in public places like   [x] Australia, Belgium, Bermuda, Bhutan, British Virgin Islands, Canada, Cuba, Denmark (in April 2007), France, Hong Kong, Iceland (in June 2007), India, Iran, Ireland, Italy, Latvia, Lithuania, Malta,Malaysia, Montenegro, New Zealand, Norway, Puerto Rico (in March 2007), Singapore, South Africa, Sweden, Uganda, United Kingdom (in April 2007 in Wales and Northern Ireland and July 2007 in England), and Uruguay.

This shows smoking is very harmful to the environment and the people who smoke and do not smoke, the law is implemented properly in the other countries. Advertisement for smoking is banned so that people do not indulge into it and on the cigarette boxes it is specified that ‘smoking is harmful’ and ‘It causes cancer’.in movies if anyone is smoking it is said below in the subtitles that smoking is injurious to health. These are one of the things the government has enforced to reduce smoking.in India also these things are done, but the smoking does not stop because people do not want to.

Thus, my hypothesis is not proved as negative externality is not reduced.

Questionnaire 1-PUBLIC

NAME-

AGE-

GENDER-

OCCUPATION-

DO YOU SMOKE?

YES

NO

ARE YOU AWARE OF THE BAN OF SMOKING IN PUBLIC AREAS?

YES

NO

DO YOU DRINK?

YES

NO

ARE YOU AWARE OF THE LEGAL DRINKING AGE?

YES

NO

DO YOU VISIT NIGHTCLUBS?

YES

NO

HOW OFTEN DO YOU VISIT NIGHTCLUBS?

ONCE A WEEK

TWICE A WEEK

THRICE A WEEK

OTHERS

WHICH NIGHTCLUB DO YOU GO TO?

HOW DO YOU GET ENTRY IN THE NIGHT CLUB, IF THE LEGAL DRINKING AGE IS 25?

THROUGH FRIENDS

PAYING MONEY

FAKE I’D

KNOW THE MANAGER

OTHER-

DOES THE BAN OF SMOKING IN NIGHT CLUBS CAUSE YOU INCONVIENCE? IF YES, HOW?

YES-

NO

IF YOUR CAUGHT SMOKING IN A NIGHT CLUB, WHAT HAPPENS?

THE INCREASE IN THE LEGAL AGE TO DRINK CAUSES YOU INCONVIENCE? HOW?

YES-

NO

DO YOU THINK THE LEGAL AGE TO DRINK SHOULD HAVE DECREASED? WHY?

YES

NO

Has the ban on smoking in public places and the raise in the legal drinking age stopped you from drinking and smoking or visiting nightclubs?

Yes

no

If yes, how do you manage to drink and smoke?

Questionnaire 2-OWNERS

NAME-

NAME OF NIGHT CLUB-

HAS THE LEGAL AGE TO DRINK REDUCED THE REVENUE OF THE NIGHT CLUB?

YES

NO

HAS THE BAN ON SMOKING IN PUBLIC PLACES (NIGHT CLUB) CAUSED YOU TO OPEN A SMOKING SECTION?

YES

NO

IF THE BAN ON SMOKING OR THE INCREASE IN THE LEGAL DRINKING AGE REDUCED YOUR REVENUE, HOW HAVE YOU OVERCOMED THIS PROBLEM TO ATTRACT CUSTOMERS?

DO YOU THINK THE LEGAL DRINKING AGE SHOULD HAVE DECREASED? WHY?

YES-

NO-

Do other nightclubs that you know of, allow young crowd?

Yes

no

DO YOU ALLOW PEOPLE BELOW THE DRINKING AGE?(optional)

YES

NO

IF THESE PEOPLE ARE ALLOWED ARE THEY SERVED ALCOHOL?(optional)

YES

NO

HAS YOUR NIGHT CLUB EVER BEEN RAIDED, IF YES? WHY?(optional)

YES-

NO

DO YOU THINK NIGHTCLUBS HAVE HIGH BARRIERS TO ENTRY?

YES

NO