Home > Research . Search . Country . Browse . Small Grants

PSC In The News

RSS Feed icon

Thompson says America must "unchoose" policies that have led to mass incarceration

Axinn says new data on campus rape will "allow students to see for themselves the full extent of this problem"

Frey says white population is growing in Detroit and other large cities


Susan Murphy to speak at U-M kickoff for data science initiative, Oct 6, Rackham

Andrew Goodman-Bacon, former trainee, wins 2015 Nevins Prize for best dissertation in economic history

Deirdre Bloome wins ASA award for work on racial inequality and intergenerational transmission

Bob Willis awarded 2015 Jacob Mincer Award for Lifetime Contributions to the Field of Labor Economics

Next Brown Bag

Monday, Oct 5 at noon, 6050 ISR
Colter Mitchell: Biological consequences of poverty

Edward Norton photo

Improving Cost-Benefit Analysis of Tobacco Regulation

a PSC Research Project

Investigators:   Edward Norton, Jeffrey A. Smith, Helen Levy

In November 2010, the Food and Drug Administration (FDA), in its first significant attempt to regulate tobacco in more than a decade, proposed regulations requiring graphic warning labels on cigarette packages. Like all major rules, this one was accompanied by a legally required regulatory impact analysis enumerating the rule?s costs and benefits. This regulation was, not surprisingly, met with immediate opposition from the tobacco industry, including pointed criticism about the method that FDA used to value the lost consumer surplus associated with reductions in smoking ? that is, smokers? foregone enjoyment. In the analysis accompanying the final rule issued in August 2011, the FDA used a compromise method to value lost consumer surplus and estimated that it would offset between 76 and 93 percent of health benefits to smokers associated with the regulation.
This regulation has not yet taken effect because of an ongoing legal challenge. Whether or not this particular rule withstands judicial scrutiny, any future attempt to regulate tobacco at the Federal level will have to provide evidence that health benefits outweigh costs?including the foregone enjoyment of smoking. Given the size of the FDA?s estimate of the foregone enjoyment relative to the health benefits of the smoking regulation, an accurate method for valuing lost consumer surplus is essential to the effective regulation of tobacco. The methods currently used by FDA do not have a sound theoretical or empirical foundation, and this issue is simply too important not to get right. Therefore, we propose to address the question: how should the FDA estimate the value of smokers? lost consumer surplus?that is, foregone enjoyment?associated with regulation-induced changes in smoking?

Funding Period: 09/12/2013 to 08/31/2016

Search . Browse