Gentle nudges are a better way of limiting tobacco consumption than hard shoves.
After a period of indecision prompted by politicians and lobbyists with interests in the tobacco business, the health ministry has finally directed that pictorial warnings on tobacco products must cover 85% of the packaging area. Sections 7 and 8 of the Cigarettes and Other Tobacco Products (Prohibition of Advertisement and Regulation of Trade and Commerce, Production, Supply and Distribution) Act, 2003 requires the printing of dissuasive health warnings on all tobacco product packages sold in India. How will these health warnings affect the consumer who, in a market economy, is meant to be free to decide his or her consumption choices free from outside pressure or interference?
Behavioral analysis of paternalism
The official regulation of tobacco has been met with charges of undue paternalism (the interference of a state with another person, against their will). Libertarians argue against dissuasive health warnings on the ground that market institutions will locate the optimum equilibrium with regard to smoking. For instance, some claim that the absence of government regulation will lead to the optimal number of non-smoking establishments, such as restaurants and bars. This will be facilitated through competition among private players. Further, market optimists claim that such warnings — carrying vivid images of lung, throat and oral cancer, and statements such as “smoking kills” — impinge on the free choice of rational consumers.
However, the need to regulate tobacco arises from the immense danger it poses to public health. Around nine lakh people die in India every year due to tobacco related diseases. Further, the cost of tobacco related diseases in India amounts to 270 billion rupees every year, which outweighs the economic gains from tobacco. Thus while the manufacture, sale and distribution of tobacco products remain legal, dissuasive health warnings strike a balance between competing ends.
There are three reasons why the charge of paternalism against graphic health warnings is not valid.
First, regulatory contexts may bear multiple possible equilibria. Market institutions often get locked in at a sub-optimal equilibrium even while better ones exist. One such superior equilibrium could be a low smoker-to-population ratio as opposed to a high smoker-to-population ratio, which the market may be trapped in. Thus the assumption that the equilibrium arrived at through market competition will inevitably be the optimal, is false. Due to path dependence, resultant outcomes may be influenced by arbitrary factors such as framing effects, starting points, default rules and behavioural biases. Like the notion of ‘temporary law’, dissuasive health warnings have the effect of offering a fresh starting point and redirecting the market to the superior equilibrium.
Second, being a weak, non-intrusive and non-coercive form of paternalism, graphic health warnings are a libertarian paternalist intervention. As it does not curtail the manufacture, sale or distribution of tobacco products, it is libertarian. It is paternalistic as it originates from the legitimacy of public institutions to influence people’s behaviour even in the absence of third party effects. Graphic warnings are aimed at steering the decisions of current and probable smokers into improving their own welfare.
Third, one cannot assume that smokers and tobacco consumers decide to smoke in their own best interests or, as Cass Sunstein and Richard Thaler say, “at the very least are better, by their own lights, than the choices that would be made by third parties”. Smokers, then, are real people not adhering to homo economicus – a concept that sees humans as consistently rational and narrowly self-interested agents who usually pursue their subjectively-defined ends optimally. As Thomas Leonard put it, “there are no cognitive free lunches”. Sunstein and Thaler attribute bad decision-making to bounded rationality and bounded self-control. Dissuasive health warnings diminish informational barriers to attaining the superior equilibrium by exposing the magnitude of risk being undertaken by the smoker or tobacco consumer.
Role of nudges
Behavioural economics may hold valuable insights on tobacco regulation, which conventional law, economics and its neo-classical assumptions fail to reveal. Sunstein and Thaler define nudges as “any aspect of the choice architecture that alters people’s behaviour in a predictable way without forbidding any options or significantly changing their economic incentives”. These may be employed to increase the degree of dissuasion, exerted through graphic health warnings, by aligning with the stimulus response compatibility of smokers. Warnings on tobacco packaging facilitate the ‘mapping’ of choices. It enables present and probable smokers to make better choices, in the interests of their own welfare, by making information about the risks more comprehensible, available and immediate.
Behavioural law and economics allows us to acknowledge that people may choose to smoke not to promote their material self-interest alone, but also their reputation and self-conception. Additionally, their decision to smoke may result not from a lack of information but an “insufficient ability to process accurately the information… insofar as that information bears on one’s own risks” and overoptimism. Nudges based on these ideas may be used to make warnings more dissuasive.
Canada has put in place one such nudge, by not attributing the pictorial warnings to any authority. Attribution, as such, has been found to dilute the impact of warnings. Marker words in colours that suggest danger or caution (such as red or yellow) may be used to strengthen the warning. Positive messages that indicate the benefits of quitting, as opposed to negative messages that state the negatives of smoking, may be more effective. Attitude functions of specific groups of consumers may be capitalised upon. For instance, cigarette packs may bear a message for young male consumers to the effect that smoking causes impotency.
Nudges can improve upon graphic health warnings to ‘de-normalise’ the practice of smoking, push it “out of the charmed circle of normal desirable practice” and dissociate notions of sophistication and virility. In this endeavour, it would also be useful to draw from the insights of identity economics, which notes the significance of social norms and identity in determining the utility function of smokers.
Dissuasive health warnings printed on tobacco products are a less intrusive and weakly paternalistic regulatory device. While libertarian critics condemn it as an interference with the free choice of rational consumers, libertarian paternalists challenge the homo economicus assumption by highlighting bounded rationality and bounded will power. Further, the possible existence of multiple equilibria within a regulatory context lend credence to the notion that health warnings may redirect the market to a superior equilibrium of a low smoker to population ratio. Incorporation of nudges may increase the effectiveness of the warnings by facilitating a better mechanism of mapping choices. Thus, it will be useful for tobacco regulation in India to avoid hard shoves and adopt gentle nudges to achieve its ends. The health ministry directive is a step in the right direction.
Sohini Chatterjee is a final year student of law at the National University of Juridical Sciences, Kolkata.