Helen Levy, Jeff Smith, and Edward C. Norton released a study entitled, “Tobacco Regulation and Cost-Benefit Analysis: How Should We Value Foregone Consumer Surplus?”

Due to Executive Order 12866, an economic analysis that shows the costs and benefits of “economically significant” regulation is required. The authors begin by outlining why this value of foregone consumer surplus is important in the cost-benefit analysis of tobacco regulation. 

The foregone consumer surplus comes into play when the health of the individual is compared to the lost enjoyment from not smoking, and when considering how that surplus should be valued. Coming up with the correct value depends on the degree to which consumers are aware of health risks associated with smoking and the rationality of their behavior. The authors’ state that the “goal of this paper is to address these questions to help inform economic impact estimates associated with future tobacco regulations.”

Find the abstract below or read the paper in its entirety here.
