CalPERS bet on Big Tobacco is bad economics for California
California Public Employees’ Retirement System officials are reportedly considering reversing the pension fund’s longtime ban on investing in tobacco companies based on one estimate that those investments could have added $3 billion in investment returns over the past 15 years.
But the economics make clear that tobacco is a bad investment for California.
In the past 15 years, smoking has added an estimated $200 billion in health care costs in the state, while costing California businesses $10.35 billion in lost productivity. Smoking adds $3.58 billion every year to the combined state and federal Medicaid tab in California.
“CalPERS’ governing board should crush the idea like a smoldering butt,” The Sacramento Bee said in an April 6 editorial. “The fund undoubtedly would make money by putting civil servants’ money into Altria and other cigarette peddlers. But tobacco is profitable because nicotine is addictive, and smoking remains the leading cause of preventable death.”