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Pleasure factor may override new tobacco rules

Pascal Le Segretain / Staff | Getty Images

Rarely has the concept of happiness caused so much consternation in public health circles.

Buried deep in the federal government's voluminous new tobacco regulations is a little-known cost-benefit calculation that public health experts see as potentially poisonous: the happiness quotient. It assumes that the benefits from reducing smoking — fewer early deaths and diseases of the lungs and heart — have to be discounted by 70 percent to offset the loss in pleasure that smokers suffer when they give up their habit.

Experts say that calculation wipes out most of the benefits from the regulations and could make them far more vulnerable to legal challenges from the tobacco industry. And it could have a perverse effect, experts said. The more successful regulators are at reducing smoking, the more it hurts them in the final economic accounting.

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"This threatens the F.D.A.'s ability to take strong actions against tobacco," Frank J. Chaloupka, an economist at the University of Illinois at Chicago, said of the Food and Drug Administration. "If they can't demonstrate that there is a significant economic benefit to doing it, then it makes their job much harder."

On Wednesday, Professor Chaloupka and other prominent economists, including a Nobel Prize winner, publicly took issue with the analysis. In a paper submitted to the F.D.A. as the period for public comment on the regulations neared its end on Friday, the group said the happiness quotient was way too high and should be changed before the regulations take effect.

"There's reason to believe that number is much too big," said Jonathan Gruber, an economist at the Massachusetts Institute of Technology who was an author of the paper. In his view, the agency's analysis cited his past work erroneously.

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The idea of lost happiness is new for health regulation. But it has surfaced as part of a longstanding requirement — first codified under former President Bill Clinton — that every set of federal regulations with more than a $100-million effect on the economy needs an analysis to prevent the adoption of regulations with high costs and low benefits.

The cost-benefit analysis is embedded in a proposal from April that would extend the F.D.A.'s authority, for the first time, to electronic cigarettes and other tobacco products such as cigars and pipe tobacco, with potentially large consequences for the multibillion-dollar tobacco industry.

The F.D.A. released a statement Wednesday morning detailing the economics behind its analysis, but the explanation did not address the central assertion made by the economists. An F.D.A. spokeswoman said that there is "still a great deal of uncertainty" surrounding the calculation, and that the agency was helping fund research to explore the issue. She emphasized that the whole purpose of a public comment period was to get the best information for new regulations before they became final. "Comments are encouraged and all will be considered," she said.

If the formula for assessing costs and benefits remains unchanged in the final version of the regulations, it could set a dangerous precedent that would constrain public-policy making for years to come, experts and advocates warned.

"This is the single biggest obstacle facing the F.D.A. in executing the job Congress gave it," Mr. Myers said. "There's no way the F.D.A. can do its job if this is applied," said Matthew L. Myers, president of the Campaign for Tobacco Free Kids, an advocacy group.

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This approach to cost-benefit analysis could also have broader implications for regulations of the food and beverage industries, which could likewise point to lost pleasure for sugar, salt or other substances regulators seek to limit.

"If this is a beach head into this kind of analysis, that should be setting off alarms," said Lisa Heinzerling, a law professor at Georgetown University and an author of "Priceless: On Knowing the Price of Everything and the Value of Nothing," a critique of cost-benefit analysis.

The only previous application of the happiness loss by the F.D.A. — to the proposal of graphic warning labels on cigarette packaging — went largely unnoticed, but the current one is drawing attention because of just how much the lost happiness counts.

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The economists speaking out Wednesday said a basic assumption that is consistent with traditional economic theory lay at the heart of the miscalculation: that most people were rational, well-informed market participants making decisions they would not later regret.

But smokers, they said, were different. The vast majority began smoking before age 18, when judgment is impaired. And many want to quit, but are addicted, and forgo the long-term satisfaction of better health for short-term pleasure.

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