It seems like the question of utility can be sliced as follows: what effect will regulation have on the utility function of those entering the job market post-regulation? And what effect will regulation have on the utility function of those already hired pre-regulation?

For those who have not entered the job market at the time the regulation goes into effect, the regulation could lower their overall utility function, depending on the job they would have taken, if not for the regulation. For example, in a non-regulated world, we can expect some businesses to enforce smoking bans, and others not to. Those job-seekers who are smoke-averse will seek employment at smoke-free establishments, and if we expect that the proportion of smoke-averse job-seekers is higher than the proportion of smoke-indifferent job-seekers, greater competition for and supply of jobs at smoke-free establishments will ilkely depress the corresponding wages. We can expect this effect to stabilize at the point at which the decrease in wages begins to exceed the health and health care costs of working in a smoke-permissive establishment. After regulation, all jobs are equivalently smoke-free. Those making their way into the job market in the post-regulation world will now be indifferent to choice between businesses formerly banning smoking and those formerly permitting it. Thus, competition for new jobs will decrease at formerly-smoke-free establishments and increase at formerly-smoke-permitting establishments, leading to an equalization in wages (for *new hires*). Those new hires who would have chosen decreased wages in exchange for smoke-avoidance may now enjoy a wage-surplus, and those who would have elected to risk the perils of smoke in exchange for increased wages are now deprived of a wage-surplus. Thus the overall utility effect of regulation seems like a wash for the yet-to-be-hired.

As for those already hired pre-regulation, a reverse distribution may result, depending on how the business responds to the cost-impact of the regulation. Let’s assume that, at the time the already-employed were hired, they had their choice of smoke-free or smoke-permitting establishment, and labor-market forces had therefore caused the wages available at smoke-free and smoke-permitting establishments to diverge due to differential supply - as described above. Let’s also assume that wages remain constant for the already-hired both immediately pre- and post-regulation. After the regulation goes into effect, those working in formerly smoke-permitting establishments will enjoy higher wages without bearing the corresponding risks, while those working in smoke-free establishments will suffer from lower wages without the benefit of the risk-avoidance they enjoyed at the time they accepted a smoke-free job. Of course, these assumptions can be attacked, but in this case regulation seems to operate more like a redistribution of wealth from the risk-averse to the risk-taking.

And now that I think of it, the labor population of the already-hired can be sliced one additional way: an assumption underlying my analysis so far has been that each business enforces a consistent policy towards smoking in the pre-regulation time period. Those employees who have chosen a job based (at least in part) on its smoke-free policy suffer when that policy is changed to a smoke-permitting one on the business’s own initiative. They are probably stuck with their job (due to transition costs) and their prior low wages (due to bargaining constraints), and now forced to bear the additional risk of second-hand smoke. In contrast, the employee who works in an establishment with a smoke-permitting policy that voluntarily switches to smoke-free is in the same boat as the already-hired employee in a smoke-permitting establisthment post-regulation: high wages without the former risk that was responsible for the increase in the first place… ie, a windfall. Regulation at least relieves the former of the imposed risk, and leaves the latter untouched.

So, of the 8 segments of the labor population whose utility function has been analyzed, the one which benefits the most from regulation is the employee whose establishment changed from a smoke-free to a smoke-permitting policy after she was hired but before regulation. As for all others, the regulation’s effects on their utility functions appears to cancel themselves out. If the endangered group is small in number (ie, if most employees have worked under a consistent smoking-policy during their work-time), the benefits of regulation may be small in comparison to the costs imposed on the smoking segment of the customer population.