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Improving Cost-Benefit Analysis of Tobacco Regulation

Principal Investigator: Edward Norton

Funding Mechanism: National Institutes of Health- Grant

ID number: 1R03CA182990-01

Award Date: 9/12/2013

Institution: University of Michigan


Understanding the economic case for tobacco regulation will be supported by impact analyses of health benefits related to smoking reduction. The costs of increased tobacco regulation include smokers’ foregone enjoyment of smoking (also known as “lost consumer surplus”); thus, an accurate method for valuing lost consumer surplus is essential to effective tobacco regulation. The goal of this project is to apply relevant economic theories and empirical evidence to determine how the FDA could estimate the value of smokers' lost consumer surplus associated with regulation-induced changes in smoking. Specific aims are: (1) to determine the appropriate theoretical model for estimating lost consumer surplus associated with regulation-induced changes in smoking; and (2) to define the appropriate range of values for key empirical parameters, such as the price elasticity of demand for cigarettes, that regulatory impact analyses should incorporate.


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