Mostly Harmless Regulation? Electronic Cigarettes, Public Policy and Consumer Welfare

44 Pages Posted: 21 Aug 2017

See all articles by Donald Kenkel

Donald Kenkel

Cornell University - Department of Policy Analysis & Management (PAM); National Bureau of Economic Research (NBER)

Sida Peng

Cornell University

Michael Pesko

Georgia State University - Department of Economics

Hua Wang

Cornell University

Date Written: August 2017

Abstract

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.

Suggested Citation

Kenkel, Donald and Peng, Sida and Pesko, Michael and Wang, Hua, Mostly Harmless Regulation? Electronic Cigarettes, Public Policy and Consumer Welfare (August 2017). NBER Working Paper No. w23710. Available at SSRN: https://ssrn.com/abstract=3023108

Donald Kenkel (Contact Author)

Cornell University - Department of Policy Analysis & Management (PAM) ( email )

120 Martha Van Rensselaer Hall
Ithaca, NY 14853
United States
607-255-2594 (Phone)
607-255-4071 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Sida Peng

Cornell University ( email )

Ithaca, NY 14853
United States

Michael Pesko

Georgia State University - Department of Economics ( email )

P.O. Box 3992
Atlanta, GA 30302-3992
United States

Hua Wang

Cornell University ( email )

Ithaca, NY 14853
United States

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