Working Paper: NBER ID: w23710
Authors: Donald S. Kenkel; Sida Peng; Michael F. Pesko; Hua Wang
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.
Keywords: Electronic Cigarettes; Public Policy; Consumer Welfare; Behavioral Economics
JEL Codes: I12
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| regulatory changes (flavor bans and warning labels) (M38) | consumer behavior (D19) |
| consumer optimization errors (D19) | tobacco product choices (L66) |
| overestimating the risks associated with e-cigarettes (D91) | likelihood of choosing e-cigarettes (D91) |
| present bias (D15) | choice of e-cigarettes (L66) |