ATLANTA – Increasing taxes on e-cigarettes in an attempt to cut vaping may cause people to purchase more traditional cigarettes according to a new study funded by the National Institutes of Health.
For every 10 percent increase in e-cigarette prices, e-cigarette sales drop 26 percent while traditional cigarette sales jump by 11 percent.
The research team, economists from six universities including Georgia State University’s Andrew Young School of Policy Studies, looked at Nielson Retail Scanner data from 35,000 retailers nationally across the years 2011 to 2017. Their study was published by the National Bureau of Economic Research this week.
“Vaping-related illnesses are a public health concern. However, cigarettes continue to kill nearly 480,000 Americans each year, and several research reviews support the conclusion that e-cigarettes contain fewer toxicants and are safer for non-pregnant adults,” said co-author Erik Nesson of Ball State University. “Thus, balancing e-cigarette and cigarette use will continue to be an important issue for policymakers.”
Twenty states had an e-cigarette tax as of January 2020, significantly raising the price of e-cigarettes. Additionally, Congress is considering enacting a federal tax on e-cigarettes. The United States House Ways and Means Committee approved an e-cigarette tax with bipartisan support in October, 2019, that set a national e-cigarette tax proportional to the Federal cigarette tax.
The prospect of a national tax concerns study co-author Michael F. Pesko from Georgia State University.
“We estimate that for every 1 e-cigarette pod no longer purchased as a result of an e-cigarette tax, 6.2 extra packs of cigarettes are purchased instead,” he said. “The public health impact of e-cigarette taxes in this case is likely negative.”
The Centers for Disease Control and Prevention has found that nearly 3 percent of adults in the United States used e-cigarettes in 2017. Usage among adolescents has grown even more rapidly, with nearly 27.5 percent of high school students using e-cigarettes in 2019.
Chad D. Cotti from the University of Wisconsin Oshkosh, Charles J. Courtemanche at the University of Kentucky, Johanna Catherine Maclean at Temple University, Nesson, Pesko and Nathan Tefft at Bates College share lead authorship for the study, “The Effects of E-Cigarette Taxes on E-Cigarette Prices and Consumption: Evidence from Retail Panel Data.”
Original release written by Marc Ransford
Senior Communications Strategist
Ball State University
Michael Pesko is a health economist and an Assistant Professor within Georgia State University’s Department of Economics. Dr. Pesko’s research uses retrospectively-collected data and quasi-experimental methods to evaluate health policy changes, especially those affecting tobacco users. Dr. Pesko is currently the principal investigator of two grants, an R01 from the National Institute on Drug Abuse evaluating the effects of e-cigarette regulations (see: e-cigarette publications and media) and a Research Scholar Grant from the American Cancer Society evaluating the effects of Affordable Care Act-induced health insurance changes affecting tobacco users. Dr. Pesko has published in journals such as Journal of Health Economics, American Journal of Health Economics, Health Economics, Health Services Research, Health Affairs, and American Journal of Public Health.