I participated in a very interesting day-long Economics of Tobacco Regulation round table hosted by the FDA and ASPE last week in Washington, D.C. The major goal of the session was to discuss findings, methods and data sets related to studying smoking initiation and cessation, in anticipation of increased regulatory steps that FDA can take as a result of the passage of the Tobacco Control Act of 2009. I will write a bit over the next few weeks about the Tobacco Control Act, a law that provides some new regulatory powers to the FDA.
What sticks out in my mind from the session was the vivid illustration of the clash of public health versus economics in the analysis of smoking (assessing costs and benefits of regulations/interventions). My Ph.D. is in Health Policy and Management from UNC-Chapel Hill, and the answer in a School of Public Health to the question, “what is the optimal smoking prevalence?” is clear.
- The answer is a decided and emphatic ZERO.
When considering smoking from an economics perspective, the answer is more complex.
- It depends, mostly on how you measure the costs and the benefits of smoking (and how you discount them). However, there is almost certainly a non zero level of smoking at which the benefits of smoking outweigh the costs.
Both ‘sides’ in this discussion were very respectful and could engage in a methodological discussion of the reasons for the gap in the ideal smoking prevalence between the two premises.
- Consumer choice has to count for something, there are diversity of preferences, and humans have smoked for a long time
- Tobacco is an addictive product, people initiate when young and many smokers state regret at doing so late in life
The practical reason this gap must be bridged is that any major regulatory initiative brought under the auspices of the Tobacco Control Act of 2009 will have to have a detailed economic regulatory analysis completed, laying out the costs and benefits. Two key methodological questions were discussed:
- should the numerous benefits to smoking cessation (essentially avoided costs) be offset by a reduction in lost benefits from the same smoking (having the effect of reducing the net benefits of any regulation)?
- even more startling/interesting was the question of whether initiatives that prevent initiation should net out lost benefits from avoided smoking, again reducing the net benefits of any regulation?
My reaction/quick answer is yes to the first question and no to the second, but I am going to try and work my way into those answers more fully over a series of posts.