Estimating the Benefits of Public Health Policies that Reduce Harmful Consumption

Ashley, Elizabeth Michiko; Nardinelli, Clark; Lavaty, Rosemarie A.

doi:10.1002/hec.3040

Cited by 25 publications

(42 citation statements)

References 29 publications

(43 reference statements)

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“…Applying this framework to an addictive good such as cigarettes requires estimation of the demand for cigarettes in the absence of addiction. One empirical approach involves eliciting a willingness to pay to be free from addiction and, assuming a plausible utility function, backing out the implied demand schedule in the absence of addiction (Ashley, Nardinelli, and Lavaty ; Cutler et al ; Weimer ; Weimer, Vining, and Thomas ). The resulting demand schedule for consumption in the absence of addiction can then be used to estimate the changes in the value of consumption from policy interventions.…”

Section: Heterogeneity Of Preferencesmentioning

confidence: 99%

When Are Nudges Desirable? Benefit Validity When Preferences Are Not Consistently Revealed

Weimer

2019

Public Administration Review

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Cost-benefit analysis, as a tool of general use in policy analysis or as a mandated analytical process in some rulemaking, provides protocols for assessing the relative efficiency of policy alternatives. However, inconsistent and apparently irrational decisions by consumers in some situations call into question the validity of inferring the values that consumers place on outcomes from their observed choices. It also opens the door for "nudges" that change the architecture of choice to promote more "rational" consumer choice. Differences between decision utility and experience utility and the willingness of consumers to pay for reductions in temptation provide conceptual bases for thinking about the efficiency of nudges. However, assessment of nudges and their role in behavioral public administration should also recognize that heterogeneous preferences can result in increases in utility for some and decreases for others. Therefore, nudges require systematic assessment like other policy instruments. Evidence for Practice• Nudges should not be viewed as panaceas; rather, they should be assessed like other policy alternatives.• When consumers make forecasting errors about the value of consumption, benefits should be assessed in terms of experience utility (the satisfaction that consumers actually realize from consumption) rather than choice utility (the satisfaction that they anticipate gaining before consumption). • Consumers who anticipate harmful temptation may obtain a benefit from the removal of the temptation from their choice set. • Heterogeneity in the prevalence of behavioral deviations from rationality, such as harmful addiction, complicates the assessment of both nudges and conventional policy interventions.

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Section: Heterogeneity Of Preferencesmentioning

confidence: 99%

When Are Nudges Desirable? Benefit Validity When Preferences Are Not Consistently Revealed

Weimer

2019

Public Administration Review

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“…The remainder of this paper discusses the advantages and limitations of four possible approaches for estimating benefits to consumers of regulations, taking the possibility of utility offsets into account: WTP for cessation, directly measuring changes in subjective well-being, structural approaches to calibrating utility, and use of rational benchmarks for valuing benefits. It is worth noting that aspects of different approaches can be used in combination; for example, Ashley et al 14…”

Section: Conceptual Issuesmentioning

confidence: 99%

Economic Approaches to Estimating Benefits of Regulations Affecting Addictive Goods

Cutler¹,

Jessup

Kenkel

et al. 2016

American Journal of Preventive Medicine

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The question of how to evaluate lost consumer surplus in benefit-cost analyses has been contentious. There are clear health benefits of regulations that curb consumption of goods with health risks, such as tobacco products and foods high in fats, calories, sugar, and sodium. Yet, if regulations cause consumers to give up goods they like, the health benefits they experience may be offset by some utility loss, which benefit-cost analyses of regulations need to take into account. This paper lays out the complications of measuring benefits of regulations aiming to curb consumption of addictive and habitual goods, rooted in the fact that consumers' observed demand for such goods may not be in line with their true preferences. Focusing on the important case of tobacco products, the paper describes four possible approaches for estimating benefits when consumers' preferences may not be aligned with their behavior, and identifies one as having the best feasibility for use in applied benefit-cost analyses in the near term.

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“…The FDA (2011,2014) and Ashley et al (2015) use the structural approach to complete CBAs of tobacco regulations. They rely on parameter estimates and assumptions from Gruber and Koszegi's (2001) structural model of cigarette addiction with quasi-hyperbolic discounting.…”

Section: Structural Estimation Of Models Of Internalitiesmentioning

confidence: 99%

“…While the TCA creates a public health standard for tobacco regulations, Executive Order 12866 also requires the FDA to conduct cost-benefit analysis (CBA) (FDA 2010(FDA , 2011(FDA , 2014(FDA , 2016. We contribute to an emerging line of research Page 4 of 57 that addresses the challenges of conducting CBAs of regulations that affect smoking and other addictive consumption (Weimer, Vining and Thomas 2009, Australian Productivity Commission 2010, Ashley, Nardinelli and Lavaty 2015, Cutler et al 2015, Jin et al 2015, Levy, Norton and Smith 2016.…”

Section: Introductionmentioning

confidence: 99%

Behavioral Welfare Economics and FDA Tobacco Regulations

DeCicca¹,

Kenkel²,

Liu³

et al. 2016

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The U.S. 2009 Tobacco Control Act opened the door for new anti-smoking policies by giving the Food and Drug Administration broad regulatory authority over the tobacco industry. We develop a behavioral welfare economics approach to conduct cost-benefit analysis of FDA tobacco regulations. We use a simple two-period model to develop expressions for the impact of tobacco control policies on social welfare. Our model includes: nudge and paternalistic regulations; an excise tax on cigarettes; internalities created by period 1 versus period 2 consumption; and externalities from cigarette consumption. Our analytical expressions show that in the presence of uncorrected externalities and internalities, a tax or a nudge to reduce cigarette consumption improves social welfare. In sharp contrast, a paternalistic regulation might either improve or worsen social welfare. Another important result is that the social welfare gains from new policies do not only depend on the size of the internalities and externalities, but also depend on the extent to which current policies already correct the problems. We link our analytical expressions to the graphical approach used in most previous studies and discuss the information needed to complete cost-benefit analysis of tobacco regulations. Finally, we use our model as a framework to reexamine the evidence base regarding the size of the relevant internalities.

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Estimating the Benefits of Public Health Policies that Reduce Harmful Consumption

Cited by 25 publications

References 29 publications

When Are Nudges Desirable? Benefit Validity When Preferences Are Not Consistently Revealed

When Are Nudges Desirable? Benefit Validity When Preferences Are Not Consistently Revealed

Economic Approaches to Estimating Benefits of Regulations Affecting Addictive Goods

Behavioral Welfare Economics and FDA Tobacco Regulations

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