Geoff Vuleta, chief marketing officer at NJOY, samples the brand's King series e-cigarette in New York, Oct. 18, 2013.

Fred R. Conrad,

Smokers' pleasure counts in new U.S. tobacco rules

  • Article by: Sabrina Tavernise
  • New York Times
  • August 7, 2014 - 1:03 AM

– Buried deep in the federal government’s voluminous new tobacco regulations is a little-known economic analysis with a potentially poisonous outcome for public policy. It assumes that the benefits from reducing smoking have to be weighed against the loss in pleasure that smokers suffer when they give up their habit.

Gains from reducing early deaths and diseases of the lungs and heart have to be written down by 70 percent, the federal analysis concluded, a formula that experts say wipes out most of the benefits from the regulations and could make them far more vulnerable to legal challenges from the tobacco industry.

This happiness loss has surfaced as part of a standard requirement — first codified under former President Bill Clinton — that every set of federal regulations with more than a $100 million effect on the economy needs an analysis to prevent regulations with high costs and low benefits.

The only previous application by the FDA — to the proposal of graphic warning labels on cigarette packaging — went largely unnoticed, but the current one is drawing attention because of just how much the lost happiness counts.

The obscure formula would have a perverse effect, experts said. The more successful regulators are at reducing smoking, the more it hurts them in the final economic accounting.

On Wednesday, a prominent group of economists, including a Nobel Prize winner, publicly took issue with the analysis.

In a paper submitted to the Federal Drug Administration, the group said the happiness quotient was way too high and should be changed before the regulations take effect.

“There’s reason to believe that number is much too big,” said Jonathan Gruber, an economist at the Massachusetts Institute of Technology.

He was an author of the paper and his past work was cited by the agency’s analysis — in his view erroneously.

A new health concept

The idea of lost happiness, relatively new in health regulation, is embedded in a proposal from April that would extend the FDA’s authority, for the first time, to electronic cigarettes and other tobacco products such as cigars and pipe tobacco, with potentially large consequences for the tobacco industry.

The FDA released a statement Wednesday detailing the economics behind its analysis, but the explanation did not address the central assertion made by the economists. An FDA spokeswoman said that there is “still a great deal of uncertainty” surrounding the calculation, and that the agency was helping fund research to explore the issue.

The spokeswoman emphasized that the whole purpose of a public comment period was to get the best information for new regulations before they became final. “Comments are encouraged and all will be considered,” she said.

If the formula for assessing costs and benefits remains unchanged in the final version of the regulations, it could set a dangerous precedent that would constrain public policymaking for years to come, experts and advocates warned. Indeed, the industry drew on a similar analysis in its successful legal battle against the FDA’s graphic warning labels about the harms of cigarette smoking, arguing that the societal benefit did not greatly outweigh the costs, said Matthew Myers, president of the Campaign for Tobacco Free Kids, an advocacy group.

“This is the single biggest obstacle facing the FDA in executing the job Congress gave it,” Myers said. “There’s no way the FDA can do its job if this is applied.”

Broader legal implications

This approach to cost-benefit analysis could also have broader implications for regulations of the food and beverage industries, which could likewise point to lost pleasure for sugar, salt or other substances regulators seek to limit.

“If this is a beach head into this kind of analysis, that should be setting off alarms,” said Lisa Heinzerling, a law professor at Georgetown University and an author of “Priceless: On Knowing the Price of Everything and the Value of Nothing,” a critique of cost-benefit analysis.

The economists speaking out Wednesday said a basic assumption that is consistent with traditional economic theory lay at the heart of the miscalculation: that most people were rational, well-informed market participants making decisions they would not later regret.

But smokers, they said, were different. The majority began smoking before age 18, when judgment is impaired. Many want to quit, but are addicted, so they forgo the long-term satisfaction of better health for short-term pleasure.

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