March 18, 2015
Good Riddance to the Healthy Choices Penalty; Public Citizen Applauds Agency Decision to Reconsider ‘Lost Pleasure’ Calculations
Statement of Robert Weissman, President, Public Citizen
Note: Today, U.S. Department of Health and Human Services officials announced they will step back from the controversial “lost pleasure” principle when calculating the costs and benefits of future regulations. Last year, economists incorporated the principle in their analysis of proposed rules for e-cigarettes and calorie counts on restaurant menus – unjustifiably reducing the projected benefits of the rules.
According to reports published today, the government is backtracking from one of the nuttiest ideas you’ll ever encounter. Experts had actually argued that, in proposing public health information programs, the government should take into account the “lost pleasure” that consumers experience as a result of smoking less or eating healthier. The monetary value assigned to this supposed loss was extremely high, such that it would undercut the benefits of some tobacco control rules by 70 percent.
Today, if reports are correct, the government has come to its senses, and will end or roll back reliance on the “lost pleasure” principle – which really amounts to a Healthy Choices Penalty.
Even within the narrow worldview of economists, the application of what is known as consumer surplus theory in public health cases was misguided. It has no application to information-providing, non-coercive programs, where consumers are making their own choices based on more fulsome information. It should not be applied to cases involving addictive products. And it requires an even-handed application of the “added pleasure” that comes from healthful living, both for consumers and for their families.
Before we wave goodbye to the Healthy Choices Penalty, we should recognize what it says about the rigor and ethics of cost-benefit analysis. What kind of analysis permits such offenses against common sense? How rigorous is this analytic approach if serious practitioners can find cause to reduce the benefits of an important public rule by 70 percent, only to be told that they got it wrong? What should be the role in our regulatory process for an analytic approach that seems so devoid of basic ethical considerations?