Benjamin Zycher

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Professor Benjamin Zycher was an economist for The Rand Corporation and a lecturer at UCLA who became erratically involved in the cash-for-comments network run for the Tobacco Institute.     He became recruited into a clandestine network of academic economists who secretly worked for the tobacco industry through the Tobacco Institute. The network was set up in November 1982 by James Savarese (working through his own company and Ogilvy & Mather PR) with later expansion nationwide through Professor Robert Tollison of George Mason University. It operated under Savarese and Tollison until early 1999, when the remnants were handed over to the Independent Institute to run
    Tollison and Savarese acted as contractors and cut-outs, using the adminstration staff at the Center for Study of Public Choice at George Mason University ( GMU) to help launder payments. They recruited ultra-libertarian economics professors at the major state universities through the Public Choice Society and various regional economics societies.
    Over a hundred professors of economics at major American universities were successfully recruited by Tollison and Savarese into these cash-for-comments network, and many of them remained in service to the tobacco industry for many years. Others only served for a short time, and then dropped out voluntarily ... or were found to be unreliable or unsatisfactory. They were not paid retainers or salaries, but were erratically commissioned to perform specified functions (usually for $1000 to $3000 per project) when the tobacco industry came under attack. Some earned much more -- often in the $20-40,000 range -- for producing 'independent research' which was customised to produce the desired results.
    Ben Zycher was one of their later recruits, and his role was mainly to provide help in convincing other economist that the ultra-libertarian version of free-market economics applied to the health industries, and that cigarettes should not be regulated in any special way. He only worked for the Tobacco Institute for a few years, but seems to have been an enthusiastic servant, willing to provide whatever propaganda they needed. He appears to have shifted to the Cato Institute which also did contract tobacco industry lobbying work.

Documents & Timeline

  • Zycher appears to have been an associate of a number of tobacco-friendly economists including Lewis Solmon and his Milken Institute; Dwight Lee; Robert Tollison, and the Clemson University cabal of cash-for-comments economists. He was a member of the Public Choice Society and the Western Economic Society. His work for the University of California at Los Angeles appears to have been minor -- just enough to add some academic qualifications to his C/V.

1984 July: Ben Zycher worked with cash-for-comments economist C 'Matt' Lindsay of Clemson University with a report "Substitution in Public Spending: Who Pays for Canadian National Health Insurance," published by Economic Inquiry.

Linday quotes from this document when he is working for the Tobacco Institute as a witness at a Congressional hearing, against HR 236. This was a bill introduced by Representative Stark (Jan 3 1985). Lindays says:

... that would make permanent the 1982 increase in the federal excise tax on cigarettes from 8 cents to 18 cents per pack.
In addition, the bill provides for annual cost-of-living increases in the tax, and proposes to allocate a portion of the cigarette tax receipts to the Medicare Trust Fund. In my opinion, this legislation is ill conceived. My opposition is based upon four points that I wish to make here today.

However, the fact that he was being paid by the Tobacco Institute for this testimony wasn't one of his four points. [2]

[Note: Zycher was probably not directly connected to the tobacco industry at this time. C 'Matt' Lindsay, however, was.]

In early 1988 the Tobacco Institute began to pay members of the cash-for-comments network to attend meetings and conferences of the various regional economics associations. They were paid about $3,000 plus expenses to attend the conference and give a paper.
The papers needed first to be cleared and 'improved' by the Tobacco Institute and were required to follow the theme of their current lobbying efforts.

It is clear that Zycher was recruited at about this time. He was not given the franchaise of a state (which most of them were) and his focus appears to have been solely on influencing other economists.

1988 July 3: Zycher's "Comments" on Dwight Lee and Richard Wagner's papers were sent to the Tobacco Institute. They were speaking on "Tax Earmarking and User Charges", as required by the tobacco industry. Zylcher had been given the role of 'discussant' -- summing up the wisdom in the paper -- or providing criticism (depending upon who was paying).

Specifically, it has been proposed that new excise taxes on tobacco products be earmarked for budget outlays on health care programs, health "education" programs, and the like. Thus, the tax/earmarked spending program purportedly would serve as a crude "user charge" for the alleged higher costs imposed by tobacco users upon the public purse.
Lee's paper correctly questions the usual assumption about tobacco use and changes in the present value of health care consumption.


1990 Apr:/E Tollison and Savarese have sent the Tobacco Institute a proposal to run special tobacco-oriented sessions at various regional conferences of economists.
They plan to run one for the Western Economic meeting in San Diego (June 30) on "Smoking and Public Policy", and another at the Atlantic Economic Society conference (October) on "User Fees" [The then current Tobacco Institute obsession]
They will use six or seven cash-for-comments economists from a pool consisting of: Robert Tollison, Richard Wagner, Dwight Lee, Fred McChesney, Bruce Yandle, Kevin Grier (George Mason University) Gary Anderson, Dan Williamson (Cal Poly San Luis), and Benjamin Zycher (The Rand Corporation). [4]
[Notes on the letter from Martin Gleason, Carol Hrycaj and Susan Stuntz show that they think this is a good idea -- "an opportunity for promotion". Carol Hrycaj is given the go ahead and Ogilvy & Mather is to be advised to promote it. James Savarese is asked to do further work on groups like this. [5]

1990 June: Carol Hrycaj reports to the Tobacco Institute on her progress with the "Social Cost" program.

Consulting economists presented papers on the social cost issue during the Western Economic Association's annual meeting in San Diego, California. Dwight Lee chaired the session entitled, "Smoking and Public Policy." Papers were offered by Lee ("Smoking and Public Policy"), Gary Anderson ("Politics, Redistribution and Smoking") and Benjamin Zycher ("Insurance and Smoking: Market vs. Government"). A full report on the conference is expected next month.

We have agreed to support consulting economists' presentations during sessions of two other major academic conferences later this year: the Atlantic Economic Society and the Southern Economic Association. Both will focus on aspects of "user fees" and budgetary politics.
Consulting economists Bob Tollison and Richard Wagner began work on the manuscript for the revised edition of Smoking and the State.

We received a proposal from consulting economist Dwight Lee to write an article on the social cost issue for placement in an economic periodical, The Margin. The publication is required reading for students of economics at universities around the country.

We continued to work on the social cost plan for 1991, with a final draft submitted for Public Affairs review.


1990 June 30: Benjamin Zycher has presented his paper at the Annual Meeting of the Western Economic Association International, in San Diego. It is titled "Insurance Markets, Smoking, and the Coase Theorem" and he gives his credentials as

Rand Corporation; University of California, Los Angeles; and the Cato Institute. The views expressed do not purport to represent those of these institutions or of any of their officers, clients, or sponsors.

Of 'coase' they do represent the views of the tobacco industry. He pontificates:

It now is the general class of "market failure" arguments that provides a last refuge for scoundrels. The latest manifestation of this trend can be found among the various proposals for regulation or taxation of cigarettes, a figurative gold mine for those interested in a display of moral posturing.

Moral posturing is certainly something you won't get from these cash-for-comments economists -- they don't have any to posture. Nor do they admit, in any of these papers, that they have been paid by the tobacco industry to write them. Their hypocricy knows no bounds. [7]

[Note that his paper's title has changed from '"Insurance and Smoking: Market vs, Government" on the draft first sent to the Tobacco Institute.]

1990 Jul 3: Richard Wagner had chaired an "Invited Session" [a Tollison-selected group within the wider conference] on "Smoking and Coase" in San Diego
[Note: The Coarse Theorum, is an economic treatment of Social Costs. It is all highly esoteric and convoluted. It depends almost totally on the assumptions made, and is related to Pigovian theory. (Regressivity)]

Gary M Anderson and Dwight Lee managed to explain the Coarse Theorum issue on behalf of tobacco interests, followed by Zycher:

In the final paper, "Insurance Markets, Smoking, and the Coase Theorem," Dr Benjamin Zycher of the Rand Corporation addressed the argument that smokers impose costs on others because they increase insurance rates for everyone.
As Zycher pointed out, even if one accepts the claim that smokers impose more costs on insurance companies than non-smokers (a claim that is not generally true) it does not follow that smokers impose an insurance externality on nonsmokers. Zycher discussed ways in which insurance companies can and do make rate distinctions between different risk categories.

[Note: However that insurance companies generally didn't make premium distinctions at this time, so smokers did impose externalities on nonsmokers. His argument uses selected, not general instances.] [8]

1991: The Tobacco Institute felt that their "Invited Session" at the Western Economic Meeting in San Diego was such a success that they promoted a similar one for the 1991 meeting in Seattle. The lecturn was also populated by their cash-for-comments lackeys.
This time the tobacco-required theme was to be "Earmarked Taxes: Economic and Political Dimensions," with papers by Dwight Lee, Henry N Butler and Robert Hayes under the chairmanship of Benjamin Zycher. Steve Jackstadt was to be a discussant along with Zycher. [9]

  • This agenda has been faxed by Dwight Lee, Uni of GA
    • Robert Hayes of Seattle University only figures in the archives on this one occasion, so clearly he didn't last as a networker for tobacco.
    • Steve Jackstadt from the Center for Economic Education, School of Public Affairs, University of Alaska, Anchorage, is the same.
    • A later replacement Dan Williamson, from California Polytechnic, San Luis also only worked for them the once.
      The Tobacco Institute's staff organisers (Martin Gleason, Susan Stuntz and Carol Hrycaj) gave them an enthusiastic go-ahead despite the fact (part concealed) that Jim Savarese was charge the industry $18,500 plus expenses. [10]
    [Note: In the washout, it appears as if Thomas Borcherding was recruited to provide some supporting discussion alongside Zycher. Both Jackstadt and Williamson must have dropped out.
    The expenses claims of Wagner, Lee and Butler are included here] [11]
    1991 Jun 29: Dan Williamson of the California Polytechnic at San Luis has submitted his discussion paper to Savarese (who claims to be an economist on occasions), and it has then been sent to the Tobacco Institute for futher checking. It appears that they were not happy with his paper.

    Three possible sources of externalities medical costs are considered:, lost productivity in the work place, and environmental tobacco smoke.
    Comments on the first two are valid and interesting although no mention is made of possible health insurance cost externalities created by smokers (Zycher discusses this). ETS externalities are not discussed at all.

    Apparently Williamson also disputes Dwight Lee's claims about the incidental nature of costs associated with ETS.

    The image the paper attempts to create of the powerful anti-smoking lobby pitted in the political arena against the individual smokers, strains for credibility.
    Also, it appears that government has made significant use of its tax incentive powers rather than direct regulation in this "externality war." How does this reconcile with the political rent acquisition motive suggested of the anti-smoking lobby?

    He also disputes Gary M Anderson's interpretation of the theory of external cost.

    This is incorrect. What the sufferer of the external cost does not do is negotiate with the party (parties) causing the externality. He or she will nevertheless do something in the face of the externality, e.g., clean up the mess that without consent has been dumped upon him.

    And then he has the nerve to criticise Ben Zycher

    The main point here is that insurance companies, as residual claimants, have incentives to eliminate cross-subsidies from non-smokers to smokers. Do they? The reasons mentioned are to get a better mix of clients (more non-smokers).

    But if all insurance companies do this they will each likely end up with the same mix of clients they started with (a prisoner's dilemma situation). Perhaps we have in fact a cooperative solution of this conflict in which none of the insurers follow this strategy and hence externalities do exist from smokers to non-smokers.

    Clearly some empirical verification is called for.

    You'll be amazed to read that Dan Williamson was abruptly removed from the discussant role and replaced with the old reliable Thomas Borcherding. [12]
    [Note: The expenses claims of Wagner, Lee and Butler are included here] [13]

    [Note also the "OK $18,500" agreement on the later agenda. ] [14]

    Zycher disappears from the archives of the cash-for-comments network at this time. However he may have continued offering services via the Cato Institute.

    1993: Zycher is on the Editorial Advisory Board of theCato Institute which had taken over Regulation magazine from the American Enterprise Institute.
    Both the list of Advisory Board members, and the authors of the articles, made this issue looks like a tobacco-industry consultants convention. Every person on the board (with two possible exceptions) was paid at various times by the tobacco industry.
    Also, at least four of the seven articles were written by long-term tobacco lobbyists -- Michael Boskin, David McIntosh, C Boyden Gray, Gary Huber, Richard Stroup and Henry Butler.
    William Niskanen, of course, ran the Cato Institute for the Koch Brothers, with Rupert Murdoch on the Board (and on Philip Morris's board). Cato had the generous help of Philip Morris whenever the tobacco industry needed a front organization. [15]

    Other SourceWatch material on Zycher