Tag Archives: economics

Working Paper: Phillips-Nissen-Rodu, Understanding the evidence about the comparative success of smoking cessation methods: choice, second-order preferences, tobacco harm reduction, and other neglected considerations

[Update 22feb15: A new version is now available: Phillips-Nissen-Rodu Smoking or quitting Neglected considerations (pdf). There is a major change in title, to “Smoking or quitting: choice, true preferences, tobacco harm reduction, and other neglected considerations”, but it is still an improved version of the same paper.

Acknowledgements for helpful suggestions that contributed to the new version to Oliver Kershaw and other participants in an ECF discussion (http://www.e-cigarette-forum.com/forum/media-general-news/626023-new-working-paper-philips-nissen-rodu-must-read.html) and Frank Baeyens.

Comments are still welcome. We will be submitted this version but should have a chance to incorporate new suggestions.


Our new working paper is available for download here: Phillips-Nissen-Rodu Understanding the evidence about cessation methods. [Update: link to obsolete version removed]

Abstract:  The extensive literature on methods people use to quit smoking is almost always interpreted in naïve and unhelpful ways. This is partially due to treating smoking cessation as if it were medical disease treatment, despite the fundamental differences. The main problem, however, seems to be a failure to recognize what it means when someone indicates they want to quit smoking. An understanding of the preferences that motivate smoking and cessation allows us to categorize would-be quitters, particularly identifying the difference between first- and second-order preferences for quitting. This demonstrates the absurdity of attempts to determine what cessation method is “best” or even “better”, as well as explaining the frequent failure of medical interventions. This analysis offers advice for both readers of the research and those who wish to quit smoking.

We believe this is a very important paper. Catherine and I have been mulling over the crux of it for literally five years and the three of us have been working on this version of it for about a year. It potentially explains a lot about why smoking cessation efforts are generally failures and smoking cessation policies are even worse. If this were taken seriously, it could really make a big difference.

En passant, the analysis has some other interesting implications. It shows that NRTs are not nearly the failure they appear to be — so long as you properly understand what is reasonable to ask of them. (I gave a talk on this material emphasizing that point to a pharma industry associated audience last week; slides are here if you are interested. Note that this does not include all the key points from the working paper.) Similarly, the analysis points out other disconnects between what happens in practice versus what happens in experimental models or other research.

Comments welcome, either here in the comments section or via email or other media.

Wind turbines definitely lower local property values. The only question is, how much?

I have not written much about wind turbines lately.  My work on that focused on their health effects on nearby residents.  But I became so fed up with the economically absurd and innumerate claims that they do no lower property values that I jotted down the following.  The primary home of what I wrote is found here, but I am reblogging it here just so I remember where to find it:


Large wind generators (IWTs, for “industrial wind turbines”) cause health problems for nearby residents, kill birds, and destabilize the power grid. Something those impacts have in common is that it would be possible for them to not be the case, and so attempts to deny them represent merely a refusal to acknowledge the overwhelming empirical evidence. That “merely” contrasts with another impact, IWTs lowering local residential property values. Denial of that not only requires ignoring the specific empirical evidence, but requires a suspension of well-established principles of economics.

The value of a piece of real estate is what someone is willing to pay for it. More specifically, in a theoretical perfect market, it is what the person (or family or other entity) who values it second-most would pay for it. This is because whoever values it first-most would have to pay $1 more than that value in order to win the bidding for it. Anything that would cause that person in the second-most position to value the property less, therefore, lowers its value.

Many people are aware of the potential health effects of nearby IWTs, and thus will value a property enormously less if it is near IWTs. For many others, the audible noise or visual impact would lower the value somewhat. If the person who values a property second-most falls into either of these groups, the value of the property will be lower. There is no reason to believe that anyone prefers to have a nearby IWT, so there is no chance that person would like the property more and thus increase the value. (Note that this analysis does not consider the net change in the value of a property with income from IWTs that are actually on the property. For such properties there will still be a decrease in value from the proximity but might be a net increase because the income more than makes up for this.)

Moreover, even someone who does not personally worry about the health risk or find the aesthetic impacts objectionable will know that others do. Thus, he will know that the potential resale value of the property is lower, and since that contributes to the value, this will tend to push down the value for even those who do not mind living near the IWTs.

Thus, there is simply no question that IWTs lower the value of nearby property, and the only legitimate question is “how much?”, not “does it occur?” Anyone who insists that there is no reduction in value is trafficking in nonsense that is actually one step worse than the nonsense that there are no health impacts, in that it denies both the evidence and the irrefutable logic.

Of course, in reality markets do not function exactly like the theoretical simplification, but the same principle applies in the real world with only a bit of additional complication. The sale of a property does not attract the attention of everyone who might want to bid, and so the second-highest valuation is not based on every possible buyer, but only on those who are in the market at the particular time. But this changes nothing. More significantly, the market is not a perfect auction, so the highest offer (which determines the market value of the property) does not consist literally of someone outbidding the second-highest by $1, but rather some guesswork about what bid is enough to convince the seller that no better offer is available. But this offer will be no higher than the potential buyer’s value for the property, which will be lowered by the factors noted above, and the guesses about alternative offers will be pushed downward by those factors also. Thus the exact real world results may not be as predictable as the theoretical case, but the fact that there is a reduction in value is unchanged.

Finally, the person/family who values a property the most is almost always, by far, the one who is living there. This is why very few sales result from an interested buyer making an offer for a property that is not actively for sale. So when residents suffer problems from nearby IWTs that make them want to move, the market value is dramatically reduced because the bidding for the property no longer includes the person who previously placed the highest value on it. Even worse than this impact on the market value, the benefits from that piece of land to overall human happiness — because it no longer provides net benefits to those who valued it the most — is reduced even more.

Empirical studies are required to determine how much property values are decreased near IWTs, and that magnitude might affect policy decisions and certainly affects cost-benefit analyses. The methods for doing such studies are highly imperfect; hence, there is room to criticize the estimated magnitude.

One thing we know for sure is that any study or assertion that insists there is no impact — is wrong.