Mostly Harmless Regulation? Electronic Cigarettes, Public Policy and Consumer Welfare
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.
We acknowledge funding from a seed grant for collaborations between Cornell University-Ithaca and Weill Cornell Medical College faculty and from National Institutes of Health grants to the University of Illinois-Chicago (CA U01-154254, 1U01CA154248-04, and R01DA045016). We thank Michael French and participants at an iHEA/AEA session, and seminar participants at Cornell’s health economics workshop for helpful comments. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
Donald S. Kenkel & Sida Peng & Michael F. Pesko & Hua Wang, 2020. "Mostly harmless regulation? Electronic cigarettes, public policy, and consumer welfare," Health Economics, vol 29(11), pages 1364-1377. citation courtesy of