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  5. Addiction, Public Policy, and Benefit-Cost Analysis
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Addiction, Public Policy, and Benefit-Cost Analysis

Paper Session

Saturday, Jan. 7, 2023 10:15 AM - 12:15 PM (CST)

New Orleans Marriott, Galerie 5
Hosted By: Society for Benefit-Cost Analysis
  • Chair: Nigar Nargis, American Cancer Society

The Opioid Crisis, Health, Healthcare, and Crime: A Review Of Quasi-Experimental Economic Studies

Kosali Simon
,
Indiana University
Catherine Maclean
,
Temple University
Justine Mallatt
,
U.S. Bureau of Economic Analysis
Christopher Ruhm
,
University of Virginia

Abstract

Opioid use is one of the most substantial and long-lasting public health crises faced by the United States. This crisis, which began by the mid-1990s and continues through the time of writing, causes 136 fatal opioid overdoses each day and costs the U.S. at least $596 billion each year. These numbers, while incredibly large, likely do not capture the full toll of the crisis on American society. In this study, we review quasi-experimental studies that examine the relationship between opioids and health and healthcare, and crime outcomes in the U.S. We focus on the U.S., a country particularly hard hit by the crisis which has adopted a broad array of policies aimed at curbing it.

Our findings align with the general perception that the opioid crisis has negatively impacted a range of health outcomes and increased healthcare costs, with limited evidence that opioids (which are designed to reduce chronic pain) have enhanced work capacity or other metrics that might capture intended benefits from appropriate use of these medications. While opioids have worsened many health outcomes, the healthcare system played a role in the emergence of the epidemic and its continuation. Further, studies suggest that opioids increase crime, although the link is not as strong as has been observed in previous drug epidemics; this finding is consistent with the pharmacological difference between opioids and stimulant substances (e.g., cocaine) that dominated earlier drug epidemic periods characterized by higher levels of crime. Through the provision of treatment to address underlying addiction and the development of strategies to effectively curtail access to opioids, the healthcare system potentially has an important role in attempts to end the crisis.

Flexibility Through Delay

Hunt Allcott
,
Microsoft Research
Matthew Gentzkow
,
Stanford University
Carl Meyer
,
Stanford University
Lena Song
,
Columbia University

Abstract

People who think they are time inconsistent would like to commit to future actions but also want flexibility to respond to uncertainty. We study one partial solution to this tradeoff, flexibility through delay, in which people can relax a previous commitment, but only if there is a delay before consumption. We show theoretically how flexibility through delay can increase long-run welfare, especially if temptation decays quickly and/or people are partially naive. We demonstrate the idea using a field experiment where we allow smartphone users to set screen time limits that can be relaxed, but consumption can begin again only after a randomly assigned delay. The results provide textbook evidence of commitment-flexibility tradeoffs: consumers assigned to shorter delays set tighter limits and relax the limits more. We use the data to estimate the parameters of a dynamic temptation model, which suggests that much of the temptation to use social media decays within two minutes. Both the model and additional survey evidence suggest that flexibility through delay would benefit consumers relative to the screen time limits currently offered by both iOS and Android smartphones, which allow full flexibility with zero delay.

Valuing Withdrawal in Benefit-Cost Analysis

Aaron Kearsley
,
U.S. Department of Health and Human Services

Abstract

Benefit-cost analyses of federal regulations apply a standard approach for discounting impacts occurring in the future, using constant real discount rates of 3% and 7%. These discount rates are intended to reflect society’s preferences; however, for policies that address internalities associated with myopia or time inconsistency, this approach to discounting will necessarily diverge from the preferences of individuals impacted by the policies unless the internalities are modeled in the undiscounted estimates. Thus, the default approach to discounting will tend to undervalue the short-term consequences of withdrawal from an addictive good relative to the long-term gains of sustained cessation. This presentation demonstrates the implications of adopting alternative approaches to discounting using standard tools of benefit-cost-analysis to value the consequences of withdrawal from the perspective of an individual with an addiction. It considers the specific case of the short-term costs of withdrawal from products containing nicotine from the perspective of an individual addicted to nicotine. It also considers the implications of incorporating evidence of the variation in severity of withdrawal symptoms across nicotine users to explain the variation in behavioral responses to policies addressing nicotine addiction.

The Costs of FDA Tobacco Regulations: A Case Study of the Proposed Prohibition of Menthol Cigarettes

Donald Kenkel
,
Cornell University
Alan Mathios
,
Cornell University
Grace Phillips
,
Cornell University
Hua Wang
,
Cornell University
Sen Zheng
,
Cornell University

Abstract

The FDA has recently proposed the prohibition of menthol cigarettes, which will be its most significant use to date of its regulatory authority over tobacco products. Prohibition of menthol cigarettes – which are smoked by over 18 million adults in the US – would be a significant use of federal regulatory authority more generally. However, the FDA’s published estimates of the regulatory costs are small ($0.08 per pack) because the FDA does not quantify the opportunity costs imposed on consumers. We provide a case study that quantifies the regulatory costs menthol prohibition imposes on consumers. To study menthol prohibition, we designed and conducted an online discrete choice experiment (DCE). We use the DCE data to estimate a mixed logit/random coefficients model of menthol smokers’ preferences over cigarettes, e-cigarettes, and quitting; the DCE experimentally varied the product attributes of price and legal availability. We use the estimated consumer choice model to complete two exercises in cost-benefit analysis (CBA). Our preliminary estimates of the regulatory costs of menthol prohibition range from smaller to somewhat larger than the estimated $18.9 billion of life-saving benefits from the reduced externalities from smoking.

Discussant(s)
Helen Levy
,
University of Michigan
Alex Rees-Jones
,
University of Pennsylvania
Clark Nardinelli
,
United States Food and Drug Administration
JEL Classifications
  • D6 - Welfare Economics
  • L5 - Regulation and Industrial Policy