Coauthors Report Intended to Help Strengthen Cost-Benefit Analysis

TAHLEQUAH A Northeastern State University professor of economics was one of nine noted health economists who recently authored a paper reviewing a cost-benefit analysis the FDA has prepared for proposed tobacco regulations.

The paper is part of a recently closed comment process on proposed comprehensive FDA regulations for tobacco. Participation by NSUs Dr. Fritz Laux in this project was funded via a research scholar appointment from the Oklahoma Tobacco Research Center.

Federal agencies are required to provide a cost-benefit analysis when considering implementation of new regulations. According to the economists paper, the FDAs analysis overestimates the lost pleasure for smokers, when they quit smoking, and underestimates the benefits of reducing smoking. Their analysis, featured on the front page of the August 7th New York Times, focuses on anew formula for assessing the value of tobacco regulation.

Despite these complaints, Oklahomas Dr. Laux is generally supportive of the FDA approach. He says that this is because previous FDA cost-benefit analyses of smoking had established the precedent of assuming that adult smokers, by choosing to smoke, were making rational and good decisions. The standard assertion had been that adult smokers were fully aware of the health risks and addictive nature of cigarettes and still chose to smoke because the pleasure of tobacco use outweighed these negative effects. The only exception to this was for youth smoking, which FDA analysts allowed could be driven by irrationality.

I applaud the FDAs new approach, which finally takes into account the fact that many smokers have difficulty controlling their smoking and would be willing to pay substantial sums of money to be free of their smoking habit, Laux said. Regulatory impact analyses should be based on truth and logic and the FDA is helping us move in this direction. For decades it has seemed evident that the primary reason we tax and regulate the sale of cigarettes is because cigarette smoking is bad for the smoker, himself. This current FDA analysis articulates the idea that we are concerned not just about second-hand smoke but also first-hand smoke. First-hand smoke kills many more people than second-hand smoke, said Laux.

The main emphasis of the economists paper, however, is on how the FDA analysis could be improved. First and foremost the economists suggest that youth smoking should be treated differently than adult smoking, more like the FDA has treated youth smoking in the past.

Other suggestions relate to the accounting of smoking costs, such as the need to consider the costs of maternal smoking, and in the accounting of other errors in decision making. An important one of these in the technical area of psychology is called projection bias.

The authors of the paper are Frank J. Chaloupka, University of Illinois at Chicago; Kenneth E. Warner, University of Michigan; Daron Acemoglu and Jonathan Gruber, Massachusetts Institute of Technology; Fritz Laux, Northeastern State University; Wendy Max, University of California, San Francisco; Joseph Newhouse, Harvard University; Thomas Schelling, University of Maryland; and Jody Sindelar, Yale University.

The Oklahoma Tobacco Research Center (OTRC), which funded Lauxs research, was created in 2008. It provides research to identify, evaluate, and disseminate best practices in tobacco control for the state of Oklahoma. For FY2015, the OTRC has received a $1,510,000 research grant from the Oklahoma Tobacco Settlement Endowment Trust. This will be allocated for the support of many different projects from around the state.