Chapter 37 Question ○ three one

Why are Big Tobacco CEOs willing to testify under oath that nicotine is not addictive? On April 14, 1994, at a congressional hearing on regulations governing tobacco products, the chief executives of the seven largest U.S. tobacco companies testified under oath.One by one, they declared that they firmly believed that nicotine was not addictive.However, there has long been a large amount of scientific evidence that nicotine is highly addictive, so the testimony of these CEOs has been ridiculed and shamed by the public.Why are they willing to endure such humiliation? According to Adam.Smith's theory of compensating wage differentials, enduring public humiliation is clearly an unpleasant condition of employment.There is no doubt that the salary of the CEO of a tobacco company is among the highest in the country.For example, Philip.Altria, the parent company of Philip Morris cigarettes, paid its CEO $18.13 million in salary in 2005.