How Much is the 'Lost Pleasure' From a Cigarette Worth? (Op-Ed)
Celia Wexler is a senior Washington Representative for the Center for Science and Democracy at the Union of Concerned Scientists (UCS), where she focuses on food and drug safety, protections for scientist whistle-blowers and government transparency and accountability. She is the author of "Out of the News: Former Journalists Discuss a Profession in Crisis" (McFarland, 2012). She contributed this article to Live Science's Expert Voices: Op-Ed & Insights.
With a halo of gray hair framing his round, bespectacled, bearded and mustachioed face, Stanton Glantz, looks kindly — almost like Santa Claus. But for decades, he's been Big Tobacco's biggest nightmare.
In 1994, Glantz received a treasure trove of secret documents from the tobacco industry from an anonymous whistleblower. He published the documents on the Internet, proving that cigarette companies had been fully aware of the health harms of tobacco for decades.
Fighting tobacco has been a lifelong effort for Glantz, a professor of medicine at the University of California, San Francisco, He has done research on both the health effects of tobacco and the efficacy of smoking-cessation programs. His official title is American Legacy Foundation Distinguished Professor in Tobacco Control at the Center for Tobacco Control, Research and Education. He also has written books on statistics and minored in economics while earning his doctorate. He's no intellectual slouch when it comes to the dismal science.
Now, Glantz is on the warpath again. And this time his fight affects not only how the U.S. government protects us and our children from tobacco, but also fast food, alcohol and even gambling. His new foe is the notion that when figuring out the benefits of restricting tobacco use, federal agencies must consider the high value a smoker places on the "pleasure" of smoking.
Let's say a pack of cigarettes costs $5. A smoker might be willing to pay $25 for cigarettes if he really needs a hit of nicotine. So economic theory might then consider the real value of those cigarettes to be $25 — what a smoker is willing to pay, rather than what a pack costs in the marketplace.
Glantz's crusade gets wonky, but keep reading. Factoring in "lost pleasure in economic analyses is not new. But what Glantz objects to is using the lost pleasure discount when discussing products that people often are addicted to. The lost pleasure factor, he argues, makes sense when economists are trying to figure out what a rational consumer would do in the marketplace. But, an addicted consumer is not rational. Neither is a minor, who may be tempted to experiment with a lot of addictive products. [Images: New Cigarette Labels Unveiled by the FDA ]
Why does this economic jargon matter? Because federal agencies, when they are proposing rules, often estimate their costs to the regulated industries or individuals, and compare those numbers to the rule's benefits for the public at large. While this may be an elegant concept in economics, it's never worked that well in the real world of public protections.
Industries are good at estimating — and often exaggerating — the monetary costs of a protective rule, while agencies discuss improving public health and saving lives, which are difficult to measure in dollars. How do you monetize the ability of children to play outdoors because the air is not polluted? How much is a human life worth? And then there's basic fairness to consider — is it right that while one person (or company) profits from polluting, different people, including workers, get sick from it?
The tussle over cost-benefit analysis has persisted for years. But at the U.S. Food and Drug Administration (FDA), economists are pushing the envelope in ways that could very well tie government's hands whenever it wants to take action to curb addictive, self-destructive behavior — even by minors.
In 2009, Congress gave the FDA the power to regulate tobacco. The FDA then proposed labeling rules that would include strong warnings on packages of cigarettes, warnings that Congress actually put in the text of the law, The Family Smoking and Tobacco Control Act.
The FDA also proposed making those labels big and prominent. When the FDA conducted a cost-benefit analysis of the benefits of those warning labels, it did something unprecedented: The agency's economists factored in the value of "lost pleasure" from smoking.
The FDA figured that lost pleasure would reduce the value of health benefits — lives saved and health improved — by 50 percent. That's right. The agency estimated that the value of lost pleasure to smokers was so great, it would cut the benefits in better health and lives saved by half.
Tobacco companies sued the FDA over those rules, claiming it violated the tobacco industry's First Amendment rights to promote their product, and a conservative federal judge threw them out in a widely-criticized decision.
But the FDA has not abandoned regulatory attempts, even as its own economists make regulation harder to defend. Currently, the FDA is proposing rules that would give it the power to regulate e-cigarettes, pipe tobacco and cigars. E-cigarette makers would need to have their products approved by the FDA, include warning labels and ban sales to minors, although the entire process for regulatory oversight likely will take years, and does not address advertising limits.
Guess what? Not only is the FDA including the lost pleasure factor when it estimates benefits, FDA economists now believe that lost pleasure will reduce the benefits by 70 percent. So if e-cigarette regulations produce health and productivity benefits of $1 billion, by this calculation, the benefits would be worth only $300 million.
What's worse, in a paper written by two FDA economists, this 70 percent or higher "discount" could apply to other regulatory areas such as junk food, alcohol or gambling. (The paper, published last February in the journal Health Economics, includes an economist from the Office of Management and Budget as a co-author. All three write that their views are their own, and not necessarily their respective agencies'. But, it's not comforting to see that public servants are thinking this way.)
Let me know if this makes sense to you: Because I'm addicted to sugar, and sugar has demonstrated harmful health impacts, labels letting me know how much extra sugar has been added to a food product would in some way make me unhappy as well as healthier. Just knowing about the extra sugar would deprive me of the pleasure of literally feeding my addiction.
When a Reuters reporter tried to get these economists on record to explain their reasoning, they demurred, but in their paper, the FDA economists cite a 2002 study by MIT economist Jonathan Gruber on the lost pleasure discount. But Gruber has said that his work was misunderstood, contending that the lost pleasure discount should not apply when considering behavior by consumers who likely got hooked on tobacco when they were kids and now are addicted.
Extensive and careful scientific analysis has documented the health risks from tobacco, alcohol and junk food, particularly to those who are addicted to those products.
"This makes no sense in terms of science," Glantz said. Economists have a role to play at federal agencies, but Glantz pointed out that in this evaluation, economists should not be "the only voice." Behavioral psychologists, pharmacologists, physicians, epidemiologists and biologists among others also should weigh in. Protecting our families from harm should not be trumped by invented theories about lost pleasure.
"This is just plain dumb," Glantz pronounced. But it is powerfully dumb. The FDA's proposed regulation, including this wacky cost-benefit calculation, is open for public comment until August 8.
On June 24, the FDA released changes to its proposed rule from the White House Office of Management and Budget (OMB). OMB has to approve agency rules that have significant economic costs. On initial analysis, it appears the OMB heartily endorses the lost pleasure discount, and may have even ratcheted it up a bit in the proposed rule.
Unless there is major pushback, the FDA will continue to be guided by its misguided economists. It's time to tell the FDA that the lost pleasure concept will only create pain for the public.
The author's most recent Op-Ed was "Why Whistle-Blowers Should Watch Out for New Loophole." The views expressed are those of the author and do not necessarily reflect the views of the publisher. This article was originally published on Live Science.
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