Department of Policy Analysis & Management
MVR Hall Cornell University
Ithaca NY 14853
NBER Working Papers and Publications
|August 2017||Mostly Harmless Regulation? Electronic Cigarettes, Public Policy and Consumer Welfare|
with Donald S. Kenkel, Sida Peng, Michael F. Pesko: w23710
Electronic cigarettes are a less harmful alternative to combustible cigarettes. We analyze data on e-cigarette choices in an online experimental market. Our data and mixed logit model capture two sources of consumer optimization errors: over-estimates of the relative risks of e-cigarettes; and present bias. Our novel data and policy analysis make three contributions. First, our predictions about e-cigarette use under counter-factual policy scenarios provide new information about current regulatory tradeoffs. Second, we provide empirical evidence about the role consumer optimization errors play in tobacco product choices. Third, we contribute to behavioral welfare analysis of policies that address individual optimization errors.
|October 2016||Behavioral Welfare Economics and FDA Tobacco Regulations|
with Philip DeCicca, Donald S. Kenkel, Feng Liu: 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...
|December 2015||Menthol Cigarette Advertising and Cigarette Demand|
with Donald Kenkel, Alan Mathios: w21790
The FDA is considering using its regulatory authority over the tobacco industry to promote public health by restricting the advertising of menthol cigarettes. In this paper we contribute new empirical evidence on the effects of magazine advertisements for menthol cigarettes on cigarette demand. Unlike previous research on cigarette advertising and demand, we use individual-level data and a measure of advertising exposure based on each consumer’s magazine-reading habits. These data allow us to control for individual heterogeneity that influences both advertising exposure and cigarette demand. We exploit quasi-experimental variation in advertising exposure in the 2000s created by sharply different supply-side variation in menthol and non-menthol advertising. We examine the importance of co...
|March 2015||Retrospective and Prospective Benefit-Cost Analysis of US Anti-Smoking Policies|
with Lawrence Jin, Donald S. Kenkel, Feng Liu: 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