Are menthol smokers different? An economic perspective

Abstract More than 18.5 million current smokers in the United States usually smoke menthol cigarettes. The Food and Drug Administration recently proposed a tobacco product standard to prohibit menthol as a characterizing flavor in cigarettes. We explore whether there are internality‐based market failures that provide an applied welfare economics rationale to prohibit menthol. Our empirical approach provides descriptive evidence from the 2018 to 2019 Tobacco Use Supplement to the Current Population Survey on how menthol use is associated with smokers' market demand along multiple intensive and extensive margins. We also use measures of smoking‐related misinformation and internalities, and stated preference data, from a 2021 Cornell Online Survey. We acknowledge that the associations we document in observational data might reflect bias due to self‐selection into menthol use. We leave it to the reader whether there is convincing evidence that differential levels of internality‐based market failures are a sufficient justification for the proposed prohibition of menthol cigarettes.