Source: Flickr user Morgan.

For the past five decades, there has been an all-out war waged against tobacco. In 1964, Luther Terry, then the Surgeon General of the United States, issued the first-ever health report linking smoking to life-threatening diseases such as lung cancer and heart disease. Today, heart disease and cancer remain the two leading killers in the U.S.

However, many Surgeon Generals since, as well as the Centers for Disease Control and Prevention, have done a remarkable job of educating the public about the dangers of smoking. Over the past 50 years, the percentage of adult-age smokers has fallen from 42% to a recently released figure of 17.8%, or 42.1 million adults. Additionally, since peaking at more than 35% nearly two decades ago, student smoking rates have fallen by close to 50%.

With proven links between smoking and a plethora of health ailments, one can only assume that this reduction in smoking rates has led to a healthier overall population and improved quality of life.

But, the CDC isn't the only monkey on the backs of smokers. On top of ad campaigns and educational programs warning of the harmful effects of smoking, smokers have also contended with the tightening noose of restrictive state laws. For some smokers, gone are the days of smoking in restaurants, or if you're a New York City resident, smoking in a public plaza or on a beach. To say that current smokers have been dealt a steep uphill climb might be an understatement -- but it can always get worse.

Source: Flickr user B Rosen.

Another knock against smokers?
According to a recent study released by Scott Adams and Niloy Bose of the University of Wisconsin-Milwaukee, and Aldo Rustichini of the University of Minnesota, "smokers make poor [financial] decisions and experience worse outcomes with personal finances vis-a-vis non-smokers."

The study revolved around two large-scale analyses: one that was drawn from a behavioral economics field study of 1,069 trainee truck drivers, and the other from the National Longitudinal Survey of Youth. The idea was proposed by these researchers to look into the possible link between smoking and financial outcomes, because individual decisions can have a meaningful impact on a person's job performance. In other words, people's personal financial decisions and outcomes could tell an employer a lot about what type of characteristics are likely to show up while they're working.

After researchers factored in a number of exogenous and endogenous controls which could affect the financial outcomes of the nearly 2,000-person study (such as their education level, current health status, income, and gender), a clear pattern emerged that showed smokers had poorer financial outcomes than non-smokers.

Based on the study's data, smokers are nearly twice as likely to be denied credit, are twice as likely to miss a payment on a credit card or file for bankruptcy, and are 58% more likely to max out a credit card than a non-smoker. Furthermore, smokers had an average credit score that was 35 points lower than non-smokers.

Now let's make one thing crystal clear: Smoking tobacco doesn't make you bad with your money. What this study intends to establish is that smokers' behavior could be useful in predicting their behavior in other walks of life, such as financial decision-making. And this, in turn, could be useful for information for employers or lenders to know. 

The real loser here
Even if the aforementioned predictive study has merit across a larger swath of the population, the real loser throughout the war on tobacco remains the tobacco producers.

Source: Flickr user Johan Lange.

In half a century, more than half of all adults who were smoking on a percentage basis have stopped. Also, the CDC notes that heavy smokers have also scaled back a bit, with the percentage of people who smoke 30-39 cigarettes a day falling to 7% from 12% of the smoking population. For tobacco producers, it means falling volumes and the need to boost prices just to continue growing. At what point, though, do prices become a consumer deterrent rather than a benefit for tobacco companies?

This uphill battle for tobacco companies is especially prevalent within the United States. When Altria (NYSE:MO), the company behind the dominant premium brand Marlboro, reported its third-quarter results in late October, investors saw more of what they've come to expect: adjusted EPS up 1.4% and revenue net of excise taxes up 2.7%. Yet, dig past the surface and into the "butt" of Altria's business, and you'll see a steady decline in cigarette volume. Over the first nine months of 2014, Altria sold 3.33 billion fewer cigarette sticks than during the comparable period last year, a 3.4% decline. This is a trend that goes back many years.

However, we're even seeing international companies struggle with stricter smoking regulations. Countries like India and China, which have a rising middle class, have been a veritable gold mine for Philip Morris International (NYSE:PM), but it's struggled in select countries such as Australia, which is looking to fight back against tobacco in much the same way we've witnessed U.S. regulators wage their war. At least Philip Morris can rely on the fact that it operates in more than 100 countries around the globe, so strength in India, China, and other developing markets can potentially help offset stricter laws in developed nations. Altria and U.S.-only manufacturers don't have that luxury.

This alternative may not be a better bet
One alternative tobacco producers have turned to in recent years is electronic cigarettes. These electronic devices heat a liquid solution containing nicotine into a vapor, which the user then inhales. The idea is to break consumers' smoking habit with the device, while also supplementing tobacco companies' wallets with additional revenue since they're losing tobacco smokers left and right.

Source: Flickr user TBEC Review.

Unfortunately, the jury is still out on the commitment and safety of electronic cigarettes. A study from National Jewish Health recently showed that the liquid used in electronic cigarettes has been linked with a higher risk of respiratory viral infections. Furthermore, electronic cigarette penetration appears to have stalled out, with around 8% of all U.S. adults having tried the new devices at least once in their life as of 2013 (the same figure as 2012). Even now electronic cigarettes account for just a fraction of Big Tobacco's revenue.

Big Tobacco is in big trouble
The CDC is currently targeting an adult smoking rate of just 12% from 2020. While that might seem like a far-fetched figure, the reality is that fewer people are buying cigarettes today than in the prior year, and this is a trend that has persisted for 50 years. While it's far too early or presumptuous to bet on whether this means improved credit scores for Americans as a whole with fewer smokers, it certainly means times are rapidly changing for the tobacco industry.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.