Measuring the impact of P.L. 99-252: an economist's view

This paper examines ways in which standard economic analysis may be used to predict and evaluate the impact of P.L. 99-252, the Comprehensive Smokeless Tobacco Health Education Act of 1986. Simple supply and demand models are used to illustrate the range of possible effects of the act. Analysis indicates that the act should reduce demand, though the magnitude of the impact can only be determined empirically. Given that the act affects only one of the principal determinants of demand, consumer preferences, the impact may be rather limited in magnitude. The impact on supply is more ambiguous, but it is possible that restrictions on advertising might lower the smokeless tobacco producers' costs in ways that would lead to an increase in supply. Several suggestions for empirical measurement of impact are made. Three other issues are identified and discussed: potential negative consequences of the act's required health warnings (as a liability defense for firms); the importance of point of view in dealing with the costs of smokeless tobacco use; and a comparison of the act to alternative strategies to reduce smokeless tobacco use, such as taxation.