In the last few years, the number of cigarettes sold in the United States plummeted by roughly one-third, from almost 204 billion in 2020 to 138 billion in 2024. The share of American adults who smoke has been falling for decades and is at or near an all-time low. And yet the tobacco industry is thriving — so much so, The Economist remarked in a recent essay, that an investment in tobacco stocks at the start of 2024 would have earned a higher return than an equal investment in the Nasdaq index, which includes many of the world’s hottest technology stocks. All in all, US tobacco companies are expected to report a $22 billion operating profit this year. “Not bad for a dying industry,” the magazine wryly observes.
What accounts for this seeming paradox? How does an industry that has hemorrhaged consumers by the millions remain so prosperous?
The answer, at least in part, is that while many former smokers have kicked the habit, those who haven’t tend to be diehards — the ones for whom quitting is unthinkable. Whereas casual tobacco users were prepared to give up cigarettes once prices rose too high, tobacco companies understand that their customer base now consists disproportionately of smokers for whom, in effect, no price is too high. In the jargon of economics, such customers are “price-inelastic” — they may grumble when the price rises, but they’ll keep buying.
Tobacco executives understand this perfectly. As one industry executive put it, “We can continue to take pricing to offset volume declines.” Translation: we sell fewer packs of cigarettes, but we charge much more for each one.
The soft-drink industry offers a similar example. Americans drink significantly less soda than they did a generation ago, as health-conscious consumers increasingly favor water and other beverages. Yet companies like Coca-Cola and PepsiCo remain highly profitable, in part because their remaining customers are loyal and relatively insensitive to price increases.
Ditto the liquor trade. Gallup reported in August that the share of US adults who drink alcohol has fallen to 54 percent — the lowest rate in the 86 years Gallup has been tracking this metric. The trend is especially pronounced among younger Americans. Nevertheless, the industry is not just surviving, but thriving. Premium labels and limited releases keep margins healthy, even as overall consumption dips.
The pattern isn’t limited to products people ingest. Vinyl records, for instance, have become a case study in loyalty economics: Long after most listeners switched to digital formats, collectors and audiophiles kept buying LPs — in such numbers that vinyl now outsells compact discs. What was once regarded as a dying medium endures because its remaining adherents are so devoted to LPs that even prices of $25 and up per album don’t deter them.
These are all versions of the same phenomenon: The casuals depart, the faithful stay, and the price of attachment climbs.
Economists can diagram that dynamic as an elasticity curve. Behavioral scientists might describe it as resistance to change. The rest of us see it as something more human — stubbornness, compulsion, loyalty, the dogged refusal to alter course, whatever the cost.
Inelasticity isn’t only a market phenomenon. It runs through human character. The same persistence that can keep a diehard music lover flipping through record bins can manifest itself in circumstances far removed from consumer choice.
Sometimes such obstinacy is a curse, binding people to self-defeating habits. But at other times it is the very definition of integrity. The same trait that keeps the smoker lighting up despite the warnings can keep the reformer speaking out despite the threats.
The Pilgrims of 1620 exemplified that kind of moral unshakability. When the only way to worship as they thought right was to leave their homes in England, they chose exile over conformity. During their first year in the “hideous & desolate wilderness” of Massachusetts, they paid for their convictions in starvation, sickness, and death. The Pilgrims suffered every loss imaginable, except the loss of faith. When it came to religion, they were “price-inelastic” almost to the point of martyrdom.
The same quality shows up in every age. It animates the dissident who suffers in prison rather than betray the truth, the spouse whose commitment to be there “in sickness and in health” doesn’t waver in the face of a partner’s dementia or devastating injuries, and the medical researcher who doesn’t let the mockery of professional peers dissuade him from pursuing an unpopular truth. They endure not because it pays, but because quitting would betray something essential to who they are.
Yet inelasticity can also turn dark. The partisans who twist facts and logic to defend any outrage committed by the leader they idolize, the “useful idiots” whose loyalty to murderous utopian schemes never wavers, the bigots who fiercely cling to ancient hatreds — they, too, are steadfast, but theirs is the steadfastness that curdles into moral blindness. When fidelity becomes idolatry, persistence becomes pathology.
Our culture praises flexibility, reinvention, and “knowing when to move on.” But civilization also depends on people who stand firm. Every principle, every institution, every craft that outlasts its moment owes its survival to a few obstinate souls who keep showing up long after the crowd has gone home. The market sees them as curiosities or even profit centers. History sees them as ballast.
That is the paradox: The same inner steel that sustains moral commitment can also make repentance impossible. Faith and fanaticism often draw on the same human material; the difference lies not in the strength of one’s attachment but in the value of what one clings to. And all of us, sooner or later, have to decide which loyalties are truly worth their price.
Random stuff I find interesting and you may not.
