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Estimating the Impact of Food and Drug Administration Regulation of Cigarette Package Warning Labels and the Potential Added Impact of Plain Packaging: Evidence From Experimental Auctions Among Adult Smokers

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  • Thrasher, James F.
  • Rousu, Matthew C.
  • Hammond, David
  • Navarro, Ashley
  • Corrigan, Jay R.

Abstract

Objective-To estimate differences in demand for cigarette packages with different packaging and health warning label formats. Methods: Adult smokers (n=404) in four states participated in experimental auctions. Participants bid on two of four experimental conditions, each involving a different health warning label format but with the same warning message: 1. text on 50% of pack side; 2. text on 50% of the pack front and back; 3. text with a graphic picture on 50% of the pack front and back; and 4. same as previous format, but without brand imagery. Results: Mean bids decreased across conditions (1. $3.52; 2. $3.43; 3. $3.11; 4. $2.93). Bivariate and multivariate random effects models indicated that there was no statistically significant difference in demand for packs with either of the two text only warnings; however, demand was significantly lower for both packs with prominent pictorial warnings, with the lowest demand associated with the plain, unbranded pack. Conclusions: Results suggest that prominent health warnings with graphic pictures will reduce demand for cigarettes. Regulators should not only consider this type of warning label, but also plain packaging policies for tobacco products.

Suggested Citation

  • Thrasher, James F. & Rousu, Matthew C. & Hammond, David & Navarro, Ashley & Corrigan, Jay R., 2011. "Estimating the Impact of Food and Drug Administration Regulation of Cigarette Package Warning Labels and the Potential Added Impact of Plain Packaging: Evidence From Experimental Auctions Among Adult ," 2011 Annual Meeting, July 24-26, 2011, Pittsburgh, Pennsylvania 103169, Agricultural and Applied Economics Association.
  • Handle: RePEc:ags:aaea11:103169
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    File URL: http://ageconsearch.umn.edu/record/103169/files/AAEA%20submission%20Thrasher%20et%20al.pdf
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    References listed on IDEAS

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    1. John List & Craig Gallet, 2001. "What Experimental Protocol Influence Disparities Between Actual and Hypothetical Stated Values?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 20(3), pages 241-254, November.
    2. Craig A. Gallet & John A. List, 2003. "Cigarette demand: a meta-analysis of elasticities," Health Economics, John Wiley & Sons, Ltd., vol. 12(10), pages 821-835.
    3. Blumenschein, Karen & Johannesson, Magnus & Blomquist, Glenn C. & Liljas, Bengt & O'Conor, Richard M., 1997. "Hypothetical versus real payments in Vickrey auctions," Economics Letters, Elsevier, vol. 56(2), pages 177-180, October.
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    Cited by:

    1. Corrigan, Jay R. & Rousu, Matthew C. & Depositario, Dinah Pura T., 2014. "Do practice rounds affect experimental auction results?," Economics Letters, Elsevier, vol. 123(1), pages 42-44.
    2. Rousu, Matthew C. & Marette, St├ęphan & Thrasher, James F. & Lusk, Jayson L., 2014. "The economic value to smokers of graphic warning labels on cigarettes: Evidence from combining market and experimental auction data," Journal of Economic Behavior & Organization, Elsevier, vol. 108(C), pages 123-134.

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    Keywords

    Food Consumption/Nutrition/Food Safety; Health Economics and Policy;

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