NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Feng Liu

School of Management and Economics
Chinese University of Hong Kong, Shenzhen

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NBER Working Papers and Publications

October 2016Behavioral Welfare Economics and FDA Tobacco Regulations
with Philip DeCicca, Donald S. Kenkel, Hua Wang: w22718
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 pa...
March 2015Retrospective and Prospective Benefit-Cost Analysis of US Anti-Smoking Policies
with Lawrence Jin, Donald S. Kenkel, Hua Wang: w20998
Regulatory policies designed to improve societal welfare by “nudging” consumers to make better choices are increasingly popular. The application of benefit-cost analysis (BCA) to this sort of regulation confronts difficult theoretical and applied issues. In this analysis we contribute a worked example of behavioral BCA of US anti-smoking policies. Our conceptual framework extends the standard market-based approach to BCA to allow for individual failures to make lifetime utility-maximizing choices of cigarette consumption. We discuss how our market-based approach compares to the health benefits approach and the “consumer surplus offset” controversy in recent BCAs of several health-related regulations. We use a dynamic population model to make counterfactual simulations of smoking prevalence...

Published: Jin, Lawrence & Kenkel, Don & Liu, Feng & Wang, Hua, 2015. "Retrospective and Prospective Benefit-Cost Analyses of U.S. Anti-Smoking Policies," Journal of Benefit-Cost Analysis, Cambridge University Press, vol. 6(01), pages 154-186, March. citation courtesy of

December 2014Reservation Prices: An Economic Analysis of Cigarette Purchases on Indian Reservations
with Philip DeCicca, Donald S. Kenkel: w20778
The special legal status of Indian tribes in the U.S. means that state excise taxes are not necessarily collected on cigarette purchases on Indian reservations. We focus on two under-studied but basic empirical economic questions this raises. Using novel data from New York surveys that asked directly about cigarette prices and purchases from reservations, we first ask: What is the economic incidence of the tax break? In data from New York over a period when the state did not attempt to collect taxes on reservation purchases, our estimates suggest that the tax break is usually fully shifted to the consumer. The notable exception is on one reservation where a tribal monopoly captures almost half of the tax break. Second, we ask: Has the tax break increased consumer demand for low-quality cig...

Published: Philip DeCicca & Donald Kenkel & Feng Liu, 2015. "Reservation Prices: An Economic Analysis of Cigarette Purchases on Indian Reservations," National Tax Journal, vol 68(1), pages 93-118. citation courtesy of

 
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