NERA's Study on the Impact of Smoking Bans

The Situation

On 2 January 2007, the Village of Tinley Park, Illinois enacted a Clean Air ordinance prohibiting smoking in all public buildings and areas within the municipal corporate limits, including a comprehensive ban on smoking in bars and restaurants. However, following several complaints that the measure had negatively impacted local bars and restaurants, Tinley Park suspended the ban.

NERA's Role

The Village of Tinley Park retained a NERA team, led by NERA Senior Vice President Dr. Faten Sabry and Associate Director Robert Patton, to conduct an economic analysis of the impact of smoking bans at the municipal level.

Dr. Sabry and Mr. Patton constructed a database of communities comparable to Tinley Park that enacted smoking bans and a set of control communities without bans and used econometric analysis to estimate whether smoking bans have a long- or short-term impact on bar and restaurant revenues. The authors also assessed various aspects of smoking bans in communities that are comparable to Tinley Park, including legislation, mitigating efforts (exemptions and other measures designed to alleviate the economic impact on certain businesses), and effects on the local economy.

The Result

The NERA team found that 1) there is a strong seasonal effect on the revenues of bars and restaurants; 2) smoking bans do not have a long-term negative impact on bar and restaurant revenue; 3) while bar and restaurant revenue may experience a negative impact in the first three months after a ban is enacted, the impact is not statistically significant; 4) the results do not differ depending on whether the ban enacted was comprehensive or partial; and 5) a separate analysis of the Village of Skokie, Illinois (the only comparable community in Illinois that implemented a smoking ban long enough ago to observe subsequent bar and restaurant revenue) shows that there was no statistically significant impact on bar and restaurant sales associated with the partial bans on smoking in restaurants adopted.