USA

WARNING: This site deals only with the corporate corruption of science, and makes no inference about the motives or activities of individuals involved.
    There are many reasons why individuals become embroiled in corporate corruption activities - from political zealotry to over-enthusiastic activism; from gullibility to greed.
    Please read the OVERVIEW carefully, and make up your own mind.

OPINION ONLY

Chase Econometrics was an economic consultancy which was willing to churn out customised research-on-demand for the tobacco industry to prove anything their clients wanted to demonstrate.

The Tobacco Institute gave them a lot of work — and then used this fake output to feed their cash-for-comments network of academic economist, who then wrote op-ed pieces for local newspapers, promoting the fictitious claims.

One of the lead figures in this network, Richard Wagner, classed it as "Chase bullshit", but he wrote his op-ed in praise of the findings anyway.

Some key documents

1979 Jan 21: Washington Post - Nader on cost-benefits

An Analysis by Chase Econometrics for example, asserts that environmental regulation will account for an averate 0.3 to 90.4 points of the annual increase in consumer prices in the 1970-83 period,

    Unfortunately, the study is based on gross cost, not net costs and Senator Gary Hart complained "it is irresponsible to discuss costs of pollution control withou comaring them to benefits."

1983: The Economic Impact of the Tobacco Industry on the United
    States Economy. The Impacts on the National Economy.

Volume I. (Chase Econometrics)
    - Two hundred and seventy-six-page report, including appendices, of the economic impact of tobacco on the nations economy in 1983, prepared by Chase Econometrics

1983: Analaysis - publication in 1984

Some of the major findings of the '83 study include:

• Federal, state and local governments received $9.49 billion in tobacco excise and sales taxes, representing 34.6 percent of total consumer expenditures on tobacco products.
• The tobacco "core sectors" which include growing, warehousing, manufacturing, and the wholesale and retail trades of tobacco products, employed more than 414,000 persons and compensation payments totaled more than $6.72 billion.
• Related supplier industries employed 296,000 workers and paid out almost $7.4 billion in compensation.
• Combined, the tobacco core sectors and supplier industries accounted for $31.5 billion of the GNP.

The Chase study also details the impact of the tobacco industry on state economies. Reaching far beyond the primary tobacco producing states of North Carolina, Kentucky and Virginia/ the core and supplier sectors support a significant number of jobs, and a significant amount of wages and tax receipts nationwide.

    In Illinois, for example, more than 100,000 jobs were created either directly or indirectly by the tobacco core and supplier sectors. These jobs generated almost $3 million in compensation for workers.

    The updated version of this study is being prepared for release in early January, 1989.

1985 Jan 8: Short-term promotion of Helping Youth Decide. He is the Media Relations head man at the Tobacco Institute, promoting the message

1985 Apr 11: Gray and Company (a subsidiary of Hill & Knowlton) is running media tours and media promotions for Jolly Ann Davidson (to Boston) on the "Helping Youth Decide" project, and also for the Chase Econometrics Study of the tobacco industry's economic impact.

1985 May 31: Bill Kloepfer advises Sam Chilcote that he is submitting the Chase Econometrics Promotion Plan to the Communications Committee for comment. This is an attempt to persuade journalists to view the tobacco industry as important to the US Economy.

Our earlier economic studies, prepared by the Wharton Applied ResearchtCenter, were promoted broadly to the tobacco industry's closest allies, public officials and the general public, especially in tobacco states.

    There were two predictable but harmful criticisms of the study — that the industry was equating dollars and deaths, and that the studies failed to measure asserted "social costs" of smoking.

    This year, Chase Econometrics studied the impact of the nation's tcbacoo industry en the U.S. economy with special emphasis on employment, compensation, ta:: payments and import purchases for the nation....

1985 June 10: Maureen Delanty (O&M)'s May Monthly Report lists her activities.

• Participated in luncheon meeting with Steve Schlossberg and Mike Forsey to discuss labor relations opportunities for TI. We are trying to confirm Schlossberg's recommendation of Forsey with other sources.
  [Both were later widely used by Labor Management Committee.]
• Briefly discussed with Pete Sparber use of economic consultants to promote Chase Econometrics' study of the tobacco industry. Once study is available, we would like to review and prepare recommendations for this project.
  [Chase did both a general and numerous State-specific studies, custom-designed to produce the results the tobacco industry wanted.]
• Briefly discussed with you use of economic consultants on public smoking issue. We should discuss some target states so we can make recommendations and get started on this project.
• Delivered brochure on health care financing. We also printed stationery for Committee on Taxation and Economic Growth for cover letter signed by Bob Tollison. Distribution list is being compiled and brochure will be mailed as soon as possible.
• Continued to prepare op-ed articles on tax reform and work with area economists to place in newspapers in home districts of members of House Ways & Means and Senate Finance Committees.
• With Fred Panzer and Jim Savarese, coordinated Bob Tollison and Richard Wagner's responses to OTA on the earmarking of cigarette excises for health care financing.
• Arranged for Citizens for Tax Justice and Hal Hochman, professor at City University of New York, to testify before Representative Rangel on the taxation of low-income wage earners. This involved coordination of testimony with the subcommittee and making final revisions on Hochman's statement.

1985 Aug: Project Status Report

• Fire program run by Sparber - grants, etc.
• Using consultants in interviews - Jolly Ann Davidson, Philip S Schaenman
• Prepare for promotion of Chase study (Osborne Panzer) Art for Exec Summary being redeisned. Freelance writers being selected
• Promotion of Solmon

1986: A PR company Doremus & Co was used by the Tobacco Institute to promote the Chase Econometrics Studies. These studies were customised to suit the tobacco industry's requirements, and were conducted in the various states when legislation or local ordinances threatened.

1986 Feb 24: Craig Barnes (Media Relations department) memo to William Kloepfer at the Tobacco Institute about the use of various Chase Econometrics studies [See below] which have been done in a number of states to support the industry lobbying.

    These economic studies were customised to suit the tobacco industry's requirements and were conducted in the various states when legislation or local ordinances threatened. Sometimes one of the network economists would be included in the Chase team (certainly the following press briefing) to give it more credibility. He advises Kloepfer that:

In an approved revision of the plan it was decided that including a state economist in the briefings created too large a briefing team and that we would counter subsequent anti's criticism more effectively by using the economists for op-ed pieces. The approved revision has been followed.

    [Inclued] A list of the economic consultants who have completed and submitted Chase op-ed articles.

ACTION: Such op-ed pieces have been completed and pitched in each market we've entered so far.

• St. Louis — Richard M cKenzie, Washington University
• Baltimore — David Laband, University of Maryland

The following drafts have been recieved and, with minor revisions, are ready to go.

• Chicago — Henry Butler, University of Chicago
• Houston — same
• New York — Michael Crew, Rutgers University
• Atlanta — Dwight Lee, University of Georgia
• Philadelphia — Jack Militello, Wharton

Chase Econometrics = BULLSHIT

1986 Feb 26: Richard Wagner wrote a private note to his friend Robert Tollison. Here is a draft copy of my op-ed piece on the Chase bullshit.     There is some really wacko stuff in that model: increased employment increases wages, but wages have nothing to do with employment; higher wages increase inflation, but inflation has nothing-to do with wages, and money has nothing to do with inflation. Inflation has nothing to do with interest rates. And....     At any rate, I can live with the enclosed essay or some modestly revised version of it, but there is no way I can get any deeper into multiplier effects, interindustry flows, and the like [They were promoting a series of faux-economic impact studies on the effects of smoking bans which were done for the Tobacco Institute in specific cities, by Chase Econometrics.]

1986 Mar 13: A weekly Report from Walter Woodson at the Tobacco Institute indicates that even they didn't believe in Chase studies.

Sent Sutherland info for interview with Norfolk paper...got Stapf to call Page and brief him on plusses and pitfalls of a Chase interview.

1986 Mar 13: Savarese writes to Fred Panzer at the Tobacco Institute about the "Chase Study/Op-eds".

• The St Louis article has been approved and submitted to the St Louis Despatch.
• The Baltimore article has been approved, but not yet submitted.
• John Militello's Philadelphia article is awaiting approval
• Richard Wagner's Miami article is being discussed.
• Four new articles are enclosed
  • Chicago (by Henry Butler)
  • (Another by Butler) for either Dallas or Houston
  • New York (by Michael Crew)
  • Atlanta (by Dwight Lee)
• In writing stages are articles for
  • Los Angeles (by Thomas Borsherding)
  • Cleveland (by Richard Vedder)

Chase Econometrics Studies

1986 May 19: Scott Stapf at the Tobacco Institute sent to Peter Sparber a "Final report on the Chase Econometrics project." It detailed the successes of the 'Chase Campaign' Press promotion: City press tours of Sacramento, Columbus, Albany (failed in New York City) Florida still to come. Letters to the Editor being generated through field staff and TI media team members. Economists op-eds (using Chase data) through the Savarese network Smaller business publications Major industry trade releases (Doremus & Co) Labor publications (they have briefed Ms Jacobsen) Materials production - all printed and readied for distribution (including slide show)

1986 May 19: Peter Sparber at the Tobacco Institute has received a "Final Report on the Chase Econometrics project" from Scott Stapf. The main points:

• Successful press tours were held in Sacramento, Columbus, Albany, Tampa, Jacsonville (New York failed)
• Letters to the Editor were generated by TI field staff
• Economists' op-eds

  Final versions of op-ed pieces using Chase data were completed in March for St. Louis, Miami, Sacramento, Chicago, Philadelphia, Houston, Atlanta, New York and Columbus. The op-eds are being promoted by Savarese.
  
      The attached commentary submission by economist Richard B. McKenzie appeared in the May 14 issue of the St. Louis Post-Dispatch. The New York op-ed is being redirected for release in conjunction with the June 25-27 media campaign in Albany.

• Smaller business publications.

  A national version of the Chase press release and an accompanying computer-personalized letter went out in March to 200 business editors,

1986 Aug: A "Resource Evaluation" by the nine Regional VPs of the Tobacco Institute looks at each of the cash-for-comments economists on Savarese's list and at the scientific witnesses available to them. The report says about economitric studies:

    The tax analyses and factsheets are considered very useful and valuable resources.

    The Chase economic study, on the other hand, received the lowest rating (2.9) for effectiveness among evaluated resources. Having only become available in 1986, this resource was used a total of 21 times.

    Based on the RVPs' comments, there appear to be two essential requirements for an economic or tax resource such as a Chase study to be useful: data should be localized and easily understood by laypersons.

Tax and Economic Resources
As evidenced by the second highest effectiveness rating of 1.7 and their frequent use (eg 27 hearings, 17 briefings, 15 publicity activities), the tax analyses and fact sheets are considered very useful and valuable resources.

    State Activities staff was said to be "damn good in anticipating [and] in responding" to field staff needs.
The Chase economic study, on the other hand, received the lowest rating (2.9) for effectiveness among evaluated resources. Having only become available in 1986, this resource was used a total of 21 times.

    One RVP noted the study had received "good play" in the two cities in his region where there was media promotion of the Chase findings. He also pointed out that an ardent anti-smokinq state health official cited the study's figures on the industry's tax contribution to his state, an infrequent anti-smoker's tribute to industry data.

1988 Jan: The plans and budgets for various sections of the Tobacco Institute include a section on the "Social Cost Issue" to be handled by Jeffrey D Rose and Carol Hrycaj.

    This is an attempt to counter the argument that the society has a right to institute cigarette excise taxes and introduce public smoking bans because smokers impose a substantial additional burden on non-smokers through additional medical costs, cleaning, general pollution, etc.

Overview:
Implementation of our 1988 "social cost" plan is well underway. A network of "social cost" economists has been identified and held an organizational meeting in Washington, D.C. Also, several projects are underway to demonstrate the significant historical and economic contribution of tobacco to our nation's heritage.

Highlights: We have identified an initial group of economists to work on the "social cost" issue. They include:

• Bob Tollison, George Mason University;
• Richard Wagner, Florida State University;
• Dwight Lee, University of Georgia;
• Robert B. Ekelund, Jr., Auburn University;
• Gary Anderson, California State at Northridge;
• Richard Higgins, Howrey & Simon; and
• James Savarese, Savarese & Associates.

We held an organizational meeting to review "social cost" issues and to brief the economists on our issue plan.

    Research needs presented to the economists included:

• review and critique of existing "social cost" literature;
• productivity and absenteeism;
• insurance costs;
• social security/Medicare cost; and,
• application of "social cost" economics to other industries

. We will receive research proposals in the next few weeks and will select projects to begin immediately. Robert Ekelund already has submitted a proposal concerning absenteeism.

    Bob Tollison is preparing a proposal for an academic symposium on the "social cost" issue to be held once initial research is complete. The economists also are indentifying opportunities to deliver presentations on the issue before regional and national economic conferences.

    The Tollison and Wagner "social cost" book is scheduled to be published in March. We met with Tollison and public affairs counsel to discuss a media tour and other promotional ideas.

    We are negotiating with Chase Econometrics and other economic consulting firms on updating the Chase study on the economic impact of the tobacco industry. We will coordinate the project with State Activities Division's new economist once he comes on board.

1988 Oct: Report on primary activites of the Tobacco Institute lists under the heading "Social Costs"

Approval was granted to commission an update of the Chase study on tobacco's impact on the economy. The project is tentatively scheduled to be completed in late January.

1988 Oct 8: Susan Stuntz advises Sam Chilcote [Pres. of the TI] that Price Waterhouse will...

develop the attached proposal to update the 1985 [Chase Econometric] study of tobacco's economic contribution to the nation's economy, and on a state-by-state basis.

    Price-Waterhouse proposes to complete the study early next year, and has agreed to help us promote its findings. These economic studies are used frequently by field staff and legislative council in the states.

    The $60,000 quoted by Price Waterhouse to complete the work is included in the social costs budget for 1988, and a much lower figure than has been spent on these studies in the past. Bill Orzechowski will continue to coordinate the study.

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