According to a recent Reuters publication on the FDA’s new proposal on e-cigarette regulations, part of the proposal was to factor in the lost enjoyment over the lifetime cost of using vaporizers. What this means in literal terms, is that if the FDA would value the healthier longer and improved life of someone that stops smoking at $100,000, if they did so by switching to vaping, the value would be cut by 70% because of the lost enjoyment over the lifetime of using vaporizers and nicotine. Making it valued at $30,000.
That’s enough to confuse just about anyone, but this strange factor when calculating value on deterring public from smoking tobacco was based off a long established pleasure factor concept commonly used in economics, often called the consumer surplus. It is the discrepancy of what the market cost of a product is, versus what people would be ready to pay for it. Overall it is not a simple concept or easy to calculate and is often debated. A paper from health economist Jonathan Gruber, who had used the 70% factor in his paper, was quoted by the FDA in their proposal. However, he did not agree with the assessment, saying he believed it to be a misapplication of his work. Many others also say the 70% mark for value of enjoyment or if it should even apply to e-cigs would be difficult to justify.
But what does it all really mean to the e-cigarette market? So let’s go back to numbers, a person who would not spend $100,000 in their lifetime on e-cigs e-cigars or other personal vaporizer devices would be valued to only have saved $30,000 because of the 70% value on the enjoyment the user gets from them. The effect it has is that it becomes difficult to justify heavy regulations based on cost-benefit factors, and can help stop heavy regulations that could otherwise choke e-cigarette growth and innovation.
Those who are against e-cigarettes and want to heavily regulate and tax them are against the idea, calling it radical, which in all due respect, it is to some degree. Since these are all just proposals, things may change based on the feedback provided to the FDA by July 9th. Additionally, so early in the game we can expect things to keep changing and possibly more of these unusual regulation proposals arise. For now, we must wait and see if the right decisions will be made to properly regulate e-cigarettes and bring the level of safety needed without suffocating small businesses providing quality products.