Tobacco Regulation and Cost-Benefit Analysis: How Should We Value Foregone Consumer Surplus?

ABSTRACT: Recent tobacco regulations proposed by the Food and Drug Administration have raised a thorny question: how should the cost-benefit analysis accompanying such policies value foregone consumer surplus associated with regulation-induced reductions in smoking? In a model with rational and fully informed consumers, this question is straightforward. There is disagreement, however, about whether consumers are rational and fully informed, and the literature offers little practical guidance about what approach the FDA should use if they are not. In this paper, we outline the history of the FDA's recent attempts to regulate cigarettes and other tobacco products and how they have valued foregone consumer surplus in cost-benefit analyses. We advocate replacing the approach used in most of this literat

SUBMITTER: Levy HG 

PROVIDER: S-EPMC5796550 | biostudies-literature | 2018

REPOSITORIES: biostudies-literature