The FDA's cost-benefit analysis of its proposed cigarette labeling regulation has a major flaw, according to an Ideas & Opinions piece being published in Annals of Internal Medicine.
Federal agencies proposing any significant regulatory action are required to evaluate the regulation's costs and benefits. In this case, the FDA evaluated its proposed rule requiring cigarette packs to bear large graphic warning labels to deter consumers from smoking.
Among other components (costs of implementation, FDA administrative and enforcement costs), the FDA included the cost to consumers, or "consumer surplus." The consumer surplus is the pleasure smokers derive from smoking over and above the price they pay for cigarettes. A group of prominent health economists say that including "lost pleasure" from tobacco use as an element of economic impact is flawed thinking because most tobacco users derive little consumer surplus from smoking. Rather they struggle with trying to break an addiction, regret having ever started smoking, and face psychological costs from being addicted and unable to quit.
The authors urge the FDA to consider this reality in future economic evaluations of proposed tobacco regulations.
Article: DOI: 10.7326/M14-1910