This site deals only with the corporate corruption of science, and makes no inference about the motives or activities of individuals involved.
There are many reasons why individuals become embroiled in corporate corruption activities - from political zealotry to over-enthusiastic activism; from gullibility to greed.
Please read the OVERVIEW carefully, and make up your own mind.
Richard S Higgins
— A non-academic core member of the cash-for-comments network. He was the Deputy Director of the Bureau of Economics, and later worked for Howrey & Simon and later still for Berkeley Researh Group. He was intimately involved in the early tobacco industry conspiracies. —
Richard S Higgins was a core member of an extensive conspiracy organised by lobbyist James Savarese and Professor Robert Tollison of George Mason University (GMU) on behalf of the tobacco industry. He only appears to have done one study for the Tobacco Institute, however he was a life-long associate and disciple of Tollison, and worked extensively with other Public Choice Society members of the cash-for-comments network.
His deputy director role in Consumer Protection at the FTC (along with a number of other cash-for-comments economists) would have been extremely useful to the tobacco industry.
This network of compliant economists operated by using the facilities and staff of GMU's Center for the Study of Policy Choice [supposedly an independent study center within the university]. It extensively utilized the Center's membership list of extreme-libertarian professors of economics — most of whom were members of the 'Austro-Libertarian/Randian' tradition; belong to the Public Choice Society; and had tenured positions at various State universities.
These ultra-free-market professors were contracted on a pay-for-service basis to react to requests circulated by the tobacco industry for help in defeating either excise tax measures or smoking ordinances.
Richard Higgins is an expert in antitrust and consumer protection economics. His principal antitrust experience is in mergers and acquisitions, where he has made presentations at the Federal Trade Commission and Department of Justice Antitrust Division in several high-profile mergers, including Ashland/Marathon (oil refining and marketing), Cargill/Pillsbury (flour mills), Heinz/Beech Nut (baby food), and Nestle/Dreyers (ice cream).
Dr. Higgins also has substantial experience supervising liability and damages analyses of price fixing in various industries, including graphite electrodes, lysine, and vitamins.Ê Dr. Higgins has also served as testifying expert in consumer protection matters involving false advertising (Wonder Bread) and deceptive trade practices (Miracle Ear).
Dr. Higgins has published numerous articles that have appeared in professional journals and books, including papers on vertical mergers and pay-for-delay drug patent settlements.
Some key documents
• Howrey & Simon are listed along with the Scaife, Koch, Olin, Bradley, Smith-Richardson foundations as a financial contributor to the GMU Center for the Study of Public Choice.
• Higgins worked extensively with Fred McChesney who was one of the original group who advised the Tobacco Institute to set up the cash-for-comments network operations.
Both worked for the FTC during the early 1980s. Higgins was Deputy Director for Consumer Protection from 1982 to 1986. McChesney was Associate Director for Policy and Evaluation in the Bureau of Consumer Protection, 1981 to 1983.
See a jointly authored paper in Anti-trust 2003-4 "Materiality and Method in FTC Advertising Regulations."
1966: Louisiana State University B.A., Economics,
1969–19: 75 University of Georgia, Assistant Professor of Economics
1969: University of Virginia Ph.D., Economics,
1975: University of Chicago Post-doctoral study, Economics,
1976–80: Auburn University
Associate Professor of Economics
Deputy Director, Bureau of Economics
1982: The FTC's Bureau of Consumer Protection has a Richard Higgins listed as Deputy Director.
1982 Sep: The Annual Report of the FTC mentions two joint papers with Tollison and Shughart and other cash-for-comments economists.
Dual Enforcement of the Antitrust Laws, by Richard Higgins, William Shughart, and Robert Tollison, September 1982.
In this paper, a model was developed which shows that independent dual enforcement leads to more antitrust activity at a lower unit cost than would be obtained with a single agency.
On the other hand, the paper states that if the agencies collude, as they appear to do under present institutional arrangements, dual enforcement leads to less and more costly antitrust activity than would otherwise result. According to the paper, empirical tests using historical agency budget and case production figures do not refute the models main predictions. It concludes that more enforcement activity would be obtained at a lower unit cost if the 1948 FTC-Justice liaison agreement were abandoned.
Antitrust Over the Business Cycle, by Ryan Amacher, Richard Higgins, William Shughart, and Robert Tollison, September 1982.
According to this paper, two broad and venerable hypotheses can be deduced from the literature about collusion, antitrust, and economic activity. These are that both private collusive agreements and producer protection regulation should vary inversely with the business cycle. This paper gives evidence which supports both contentions. Employing data on general antitrust law enforcement activity and complaints charging violations of the Robinson-Patman Act, strong counter-cyclical tendencies are found in collusion and governmental regulatory intervention.
[These economists all had first-hand experinece with "collusion, antitrust, and economic activity.]
1982 Sep 17: A Tobacco Institute memo about "The Warning Label Inquiry" of the Federal Trade Commission.
The economist at the FTC in May—Mr. John Brown had apparently been purged and was quitting his post, so he referred me to Ms. Pauline Ippolito who only had knowledge of the Legal staff report of 1981.
At this point, I was mistakenly directed into the Bureau of Consumer Protection to a Ms.Collette (?) Guerard, Ass't. Director for Advertising Products, then to lawyer Andy Sachs who was associated with the study on the effectiveness of the warning labels.
Eric Rubin had recommended calling the Dept. Director, Richard Higgins.
It seems that the Chilton study and the Waterson study which I reviewed were not economic studies. On.hindsight, there were some cost impact analysis of cigarette labelling and rotational labelling going on, the economic approach of which were not available at that time (midsummer).
As you know, what has happended is that the FTC's Timothy Muris who had done these cost/benefit studies is now endorsing the House backers of a bill calling for rotational health warnings. He noted that some smokers"would be better able to estimate the health cost of smoking".
1984 Apr 26-27: Proceedings of a Conference on "Consumer Protection Economics" sponsored by the FTC's Bureau of Economics.
[Note Ryan Amacher of Clemson had just left the FTC]
This document contains a study by Richard S Higgins (then FTC) and Fred S McChensey (then Emory University) "An Economic Analysis of the FTC's Ad Substatiation Program" which is an attack on the new principle that advertisers had to be able to prove that their claims were true — as against the FTC being required to prove that they were false. Cigarette filters and health claims were one of the FTC's main focusses at this time.
The article carries the footnote
* The views expressed here are the authors'. They doubtless do not reflect the views of some Commissioners, and do not necessarily reflect the views of the Commission itself.
[The two authors, Ryan Amacher and the six [bold] commentators were all tobacco network academics.]
We received helpful comments on earlier drafts from Ronald Bond, Gerard Butters, David Haddock, Cotton Lindsay, Robert Mackay, Michael Maloney, the late Steven Marston, Robert McCormick, William Shughart, Robert Tollison and Bruce Yandle
1984 Apr 30: This 109 page DRAFT Tobacco Institute "Cigarette Excise Tax Plan" which was aimed at the Reagan Administration They had an immediate requirement of
It has draft copy and designs for a couple of different booklets aimed at different states, and at labor/union and racial groups.
- One public finance economist for 10 days @ $1,000, [Total $ 10,000 ] including meetings with coalition members and/or the Governor's staff; research and preparation; and testimony.
- One economist for a union workshop on the tax issue, [Total $5,000] including 3 or 4 training sessions over the course of a convention.
- Six economists @ $5,000 and one senior economist 53,000 @ $20,000 for a tax symposium, including publishing of the proceedings at $3,000. [Total $53,000] The senior economist would play an oversight/organizational role and would be responsible for editing the proceedings. Such a symposium would be staged for regional or national impact.
- One economist provided to a public employee union to do original research on the need for adequate services to be funded by broad-based taxes; this would include the final report and testimony. [Total $ 25,000]
It also identifies the targetted Congress Committeemen and state Assembleymen most likely to be influenced, and adds an appendix which lists economists who can be enlisted to help.
Potential Economic Consultants
Following is a list of economists in key states who might assist us as consultants. We have begun contacting them to ensure their willingness and expertise. We are asking each about past experience; work with similar issues; previous work with the indusry; published articles or research; and speaking availability.
As discussed in the body of this program, our intent is to have a group of individuals who we can call upon regularly to testify, conduct special research projects, and discuss their research and/or views on excise taxes with the media.
- California, Thomas Borsherding, Claremont College
- Connecticut, William McEachern, University of Washington
- Florida, Richard Wagner, Florida State University
- Georgia, Fred McChesney, Emory University Law School
- Illinois, James Heins, University of Illinois
- Massachusetts, Harlan Platt, Northeastern University
- Minnesota, Thomas Stimson, University of Minnesota (St. Paul Campus)
- New York, Harold Hochman, City University of New York
- Ohio, David Klingaman, Ohio University
- Pennsylvania, Mark Pauly, University of Pennsylvania
- Texas, Charles Maurice, Texas A&M University
- Washington, Yoram Barazel, University of Washington
- Washington, D.C. Robert D. Tollison, George Mason University
- Wisconsin, Burton Weisbrod, University of Wisconsin
Tollison is the most influential and prestigious on this list; he would be hired to consult on federal tax situations and to oversee efforts of the others throughout the country.
See last page
Yoram Barazel is the only name on this list who appears to have resisted the Institute's overtures.
1984 Nov: C/V for Ryan C Amacher of Clemson University sent to the Tobacco Industry lists:
"The Behavior of Regulatory Activity Over the Business Cycle: An Empirical Test," Economic Inquiry, forthcoming, with Richard Higgins, William Shughart, and Robert Tollison.
1985: See Center for the Study of Public Choice 43 page self-congratulatory booklet.
During 1985 Center scholars made further contributions to an ongoing research program that seeks to test empirically various aspects of the interest-group theory of government. One implication of the theory is that regulatory activities will vary over the business cycle, tending to favor consumer interests during economic expansions and producer interests during contractions.
Using data on the enforcement activities of the Federal Trade Commission under Section 2 of the Clayton Act, William Shughart and Robert Tollison (with Ryan Amacher of Clemson University and Richard Higgins of the Federal Trade Commission) published in the January 1985 issue of Economic Inquiry a paper offering evidence that anticonsumer regulation indeed intensifies during downturns in the economy and abates during expansionary phases. An extract of the paper will appear in the "Readings" section of Regulation magazine.
1987: "Dual Enforcement of the Antitrust Laws" (by William Shughart, Richard S Higgins and Robert D Tollison), in Robert J Mackay, James C Miller III and Bruce Yandle (eds.) , Public Choice and Regulation: A View from Inside the Federal Trade Commission, Stanford, CA: Hoover Institution Press
1988: to 2001 Capital Economics
— Vice president and President
1988 Jan: The plans and budgets for various sections of the Tobacco Institute include a section on the "Social Cost Issue" to be handled by Jeffrey D Ross and Carol Hrycaj.
This is an attempt to counter the argument that the society has a right to institute cigarette excise taxes and introduce public smoking bans because smokers impose a substantial additional burden on non-smokers through additional medical costs, cleaning, general pollution, etc.
Implementation of our 1988 "social cost" plan is well underway. A network of "social cost" economists has been identified and held an organizational meeting in Washington, D.C. Also, several projects are underway to demonstrate the significant historical and economic contribution of tobacco to our nation's heritage.
Highlights: We have identified an initial group of economists to work on the "social cost" issue. They include:
We held an organizational meeting to review "social cost" issues and to brief the economists on our issue plan.
- Bob Tollison, George Mason University;
- Richard Wagner, Florida State University;
- Dwight Lee, University of Georgia;
- Robert B. Ekelund, Jr., Auburn University;
- Gary Anderson, California State at Northridge;
- Richard Higgins, Howrey & Simon; and
- James Savarese, Savarese & Associates.
Research needs presented to the economists included:
. We will receive research proposals in the next few weeks and will select projects to begin immediately. Robert Ekelund already has submitted a proposal concerning absenteeism.
- review and critique of existing "social cost" literature;
- productivity and absenteeism;
- insurance costs;
- social security/Medicare cost; and,
- application of "social cost" economics to other industries
Bob Tollison is preparing a proposal for an academic symposium on the "social cost" issue to be held once initial research is complete. The economists also are indentifying opportunities to deliver presentations on the issue before regional and national economic conferences.
The Tollison and Wagner "social cost" book is scheduled to be published in March. We met with Tollison and public affairs counsel to discuss a media tour and other promotional ideas.
We are negotiating with Chase Econometrics and other economic consulting firms on updating the Chase study on the economic impact of the tobacco industry. We will coordinate the project with State Activities Division's new economist once he comes on board.
1988 Feb 2: James Savarese reports to the Tobacco Institute on a meeting with a "core group of economists"...
To exchange thoughts and ideas on the social cost issue with the goal of determining projects and making assignments for 1988.
The core group consists of
[In order to attack] Anti-smoking activists [who] have distorted the issue of social cost. Even though economists ridicule their statistics, politicians and the press believe them.
with the support of PR/lobbyists from
- Gary Anderson
- Bob Ekelund
- Richard Higgins
- Dwight Lee
- Jim Savarese
- Bob Tollison
- Richard Wagner
Conclusions: This is lobbying pure and simple: The conclusions of their report expose numerous outright admissions as to the scientific and academic subterfuge these people are knowlingly engaged in.
- Leslie Dawson, Karen Hochberger, Richard Marcus.- from Ogilvy & Mather and James Savarese & Associates
- Mike Forscey - lawyer from Wunder and Diefenderfer, working for the Labor Management Committee of TI
- Jeff Ross, Carol Hyrcaj and Paula Duhaime from the Tobacco Institute
Primary assumptions that need to be countered.
- The higher rate of illness of smokers is a 'private cost' not a social cost [and therefore should be ignored.]
- It is not politically useful for us to argue the primary health statistics.
- Up to this time, ETS has not been translated effectively by the opposition into cost numbers. Rather, it is a regulatory issue. We cannot afford to lose the argument among people who think they are being harmed by ETS. If ETS causes harm, it becomes a classic case of real social cost.
- We must make sure that primary costs of smoking be kept out of any social cost calculation. We must separate primary smoking statistics from ETS statistics.
- More research is needed on ETS in order to deny health consequences
They then allocated Research projects to the economists and disussed additional research ideas which might prove useful to the industry. Both the Southern and Eastern Economic Association presented forums at which the economists could present papers and...
- Insurance and Health Costs: Health problems exist for smokers. The cost for health care due to excess illness or death of smokers equals smokers' cost to society.
- Insurance premium — Discounts for non-smoker (not justified?)
- Pension Plans — Increased mortality rates saves money
- Productivity and Absenteeism: Smokers are absent more frequently than non-smokers.The time spent by a employee smoking on the job is time spent not working. These factors make the smoker a less productive member of society than a non-smoker.
- The worker bears the cost of absenteeism via fewer raises, less advancement, or termination. Society bears no burden.
- Social Security and Medicare: [Death benefits argument]
- Based on lifetime calculations, smokers should be getting a rebate. We should propose a rebate program, rather than a tax program.
- If non-smokers live longer, when the baby boomers reach retirement age, very high tax rates will be necessary to finance Medicare and Social Security. If smoking is banned, it would cause some serious problems in future years.
- Fires: It is not a social cost for a smoker to burn his house down, just a private cost. Social cost only exists if a neighbor's house burns down (a much smaller number).
- ETS: Blanket smoking.restrictions raise costs to private employers. If restrictions are cost effective, individual companies will adopt them.
As a result of this meeting, we should devise a specific plan and timetable- of implementation with assignments for specific projects.
We need to review and critique existing materials and develop our own core of research.
Tollison is looking for one or two others. Major session of a university to bring together all relevant research on social cost will be planned after research projects are completed. Proceedings will be published in a monograph.
1988 Feb 20: /E Richard Higgins has submitted two research proposal to the Tobacco Institute. At this time he is working with Washington Economic Research Consultants
• The first carries the confusing title: "The Excess Costs to Smoking Employees of Employer-Provided Retirement Benefits." Inc.
A fundamental assumption in all the "social cost" studies of smoking, which provide the intellectual foundation for political opposition to smoking, is that smokers have higher mortality and morbidity rates than otherwise identical nonsmokers. The truth of this assumption has implications for labor market compensation since employees are typically paid in various nonprice ways.
[This is a variation on the 'death benefits' argument. However, it is difficult to see that the tobacco industry would be keen to promote this line. Shorter life-span = cost savings in retirement plans.]
Smokers fare better than nonsmokers for some benefits and worse for others. The present study focuses on retirement benefits. The difference in the values of retirement benefits received by smokers and nonsmokers, who are otherwise identical, will be estimated. This difference arises, according to the fundamental assumption, because the life expectancy of nonsmokers exceeds that for smokers.
Since otherwise identical employees"contribute equal amounts to their employer's pension plan, smokers pay too much relative to nonsmokers for retirement benefits.
• The Second is titled: The Separate Effect of Smoking on Morbidity: Evidence from the National Health Interview Survey He attacks one of the fundamental calculations of smoker mortality.
The fundamental assumption in all "social cost" studies of smoking, which provide the intellectual foundation for political opposition to smoking, is that smokers have higher mortality and morbidity rates than otherwise identical nonsmokers.
As a matter of fact, the empirical basis for this assumption is methodologically flawed. Mortality and morbidity rates for smokers and nonsmokers have not been estimated for groups of individuals with identical relevant characteristics.
[He then determines that black may actually be white, and that he may have a way of proving this via sleight-of-hand.]
1988 Dec 8: Savarese has billed the Tobacco Institute for
Phase II - Social Cost Research Project
First of three billings
- [Robert] Ekelund - "Revenue Substitution from Smoking Regulation and Taxation: An Econometric Analysis" $14,000
- [Robert] Tollison & [Richard] Wagner - "Rent Seeking, Bureaucracy and Public Health Regulation" $ 10,000
- [Dwight] Lee - a paper on "The Political Economy of User Charges and Tax Earmarking" $ 9,500
- [Richard] Higgins - "The Excess Costs to Smoking Employees of Employer-Provided Retirement Benefits" $ 9,500
1989: Social Cost Issue, Consulting Economist Team. This document is assumed to be the Tobacco Institute informing their litigation team about the facts of the cash-for-comments academics network — and its offshoot, the core team trained in Social Cost Issues.
The social cost economic team includes: Robert Tollison, Richard Wagner, Dwight Lee, Richard Higgins, Gary Anderson and Michael Davis, These six consulting economists are specifically trained in the social cost issue, and are "prepared for a variety of assignments, from presenting testimony to conducting research."
How we use them
Kinds of things they do
- Conduct research.
- Prepare op-eds and letters to the editor.
- Review and comment on (government and private sector] social cost studies and reports.
- Media tours to promote Smoking and the State.
- Conduct briefings on the issue/arguments with legislators, staff and lobbyists.
- Conduct and publish economic research (constituting the basis of the social cost program).
- Write and place op-eds on discrete topics.
- Prepare and submit letters to the editor.
- Available to present testimony.
- Media tours.
- Make presentations to academic/economic peers.
- Conduct briefings on the issue (during social cost economist network meeting with PAD, SAD, lobbyists and legal counsel).
1989 Aug 8: Leslie Dawson of Savarese & Associate gives a status report on the Social Cost Project
- Smoking & Absenteeism (Ekelund, Ault, Jackson, Saba, Saurman) — submitted to the Southern Economic Journal, then revised and resubmitted — no editorial decision yet.
- The Social Cost of Everyday Life (Gary Anderson) — submitted to Contemporary Policy Issues — no editorial decision yet.
- Smoking and the Problem of Social Cost (Tollison & Wagner — accepted by Journal of Public Choice (they controlled the journal)
- Smoking and the Wealth of Nations (Wagner) — submitted to Journal of Contemporary Business.
- Self-Interest, Public Interest, and Public Health (Tollison & Wagner) — submitted to to Journal of Public Interest and Public Choice
- Smokers' Subsidy of Nonsmokers' Retirement Benefits (Higgins and Gordon Sufford from Capital Economics) — submitted to Social Science and Medicine
- Social Cost and the Cigarette Excise Tax: A Misguided Rationale for an Inefficient and Unfair Policy (Dwight R. Lee) — Unpublished
- Some Economic Consequences of the Koop Doctrine: National and State Revenue Shortfall from Smoking Regulation (Ekelund) - still at TI for review.
1990 Feb 1: Savarese's report to Susan Stuntz at the Tobacco Institute lists a number of projects involving the cash-for-comment economists:
- "Smoking and the Problem of Social Cost: A Survey" by Tollison and Wagner, published in Journal of Public Finance and Public Choice - reprints have been distributed.
- "Smoking and Absenteeism: An Empirical Study" by Ault, Ekelund, Jackson, Saba, and Saurman - submitted to Applied Economics.
- "Smokers Subsidy of Nonsmokers' Retirement Benefits" by Higgins and Shuford - submitted to Social Science and Medicine.
- "The Social Costs of Everyday Life" by [Gary] Anderson submitted to Contemporary Policy Studies.
- "Social Cost and the Cigarette Excise Tax: A Misguided Rationale for an Inefficient and Unfair Policy" by [Dwight] Lee - submitted to Contemporary Policy Studies.
- "Self Interest, Public Interest, and Public Health" by Tollison and Wagner - accepted for publication in Public Choice.
- "Some Economic Consequences of the Koop Doctrine: National and State Revenue Shortfall from Smoking Regulation" by Ekelund - returned to Ekelund for submission.
- "Smoking and the Wealth of Nations" by Wagner - submitted to Journal of Contemporary Business.
Began Phase III of the social cost research. Proposals have been submitted to TI.
2003 Aug: Law and Economics Papers: Why Wonder Bread Lost No Dough: Materiality, Settlements and the FTC's Ad Substantiation Program by Richard S. Higgins, Law and Economics Consulting Group (LECG)
and Fred S. McChesney, Northwestern University - Kellogg School of Management
2012: Director of a Washington Economic lobbying firm, Berkeley Research Group (BRG).