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New Study: Tax E-cigarettes, Increase Smoking

Another empirical study finds a substitution effect between vaping and smoking


A new study from the National Bureau of Economic Research examines the effects of Minnesota's decision to tax e-cigarettes like tobacco cigarettes. Here is the abstract:

E-cigarettes use a battery powered heater to turn a liquid containing nicotine into a vapor. The vapor is inhaled by the user and is generally considered to be less harmful than the smoke from combustible cigarettes because the vapor does not contain the toxins that are found in tobacco smoke. Because e-cigarettes provide an experience that is very similar to smoking, they may be effective in helping smokers to quit, and thus the availability of e-cigarettes could increase quit rates. Alternatively, e-cigarettes may provide smokers with a method of bypassing smoking restrictions and prolong the smoking habit. There is very little causal evidence to date on how e-cigarette use impacts smoking cessation among adults. Although there is no federal tax on e-cigarettes, a few states have recently imposed heavy taxes on them. We provide some of the first evidence on how e-cigarette taxes impact adult smokers, exploiting the large tax increase in Minnesota. That state was the first to impose a tax on e-cigarettes by extending the definition of tobacco products to include e-cigarettes. This tax, which is 95% of the wholesale price, provides a plausibly exogenous deterrent to e-cigarette use. We utilize data from the Current Population Survey Tobacco Use Supplements from 1992 to 2015, in conjunction with a synthetic control difference-in-differences approach. We assess how this large tax increase impacted smoking cessation among adult smokers. Estimates suggest that the e-cigarette tax increased adult smoking and reduced smoking cessation in Minnesota, relative to the control group, and imply a cross elasticity of current smoking participation with respect to e-cigarette prices of 0.13. Our results suggest that in the sample period about 32,400 additional adult smokers would have quit smoking in Minnesota in the absence of the tax. If this tax were imposed on a national level about 1.8 million smokers would be deterred from quitting in a ten year period. The taxation of e-cigarettes at the same rate as cigarettes could deter more than 2.75 million smokers nationally from quitting in the same period. The public health benefits of not taxing e-cigarettes, however, must be weighed against effects of this decision on efforts to reduce vaping by youth.

(Emphases added.)

This study is consistent with prior research finding that restrictions on youth access to e-cigarettes increases teen smoking rates.

It is becoming increasingly difficult for public health advocates and others to deny that burdening access to e-cigarettes, relative to smoking, results in higher smoking rates than we would have seen otherwise. So unless one believes the risks of e-cigarettes are anything near to those of combustible cigarettes, such policy measures have deadly consequences.

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19 responses to “New Study: Tax E-cigarettes, Increase Smoking

  1. The conclusions of this study are hardly surprising. Increase the tax on good A and users switch to substitute good B.

    But you overstate the results when you say:

    unless one believes the risks of e-cigarettes are anything near to those of combustible cigarettes, such policy measures have deadly consequences.

    First, some vapers quit, and some would-be vapers don’t start, due to the tax increase. This may produce health or mortality improvements that offset part or all of the damage from increased cigarette smoking. The paper does not address that issue.

    Further, the study deals only with adult users. The authors write:

    Our study addresses how e-cig use impacts adult smoking, which represents one side of the policy debate surrounding e-cigs. For adolescents, nicotine addiction, the potential progression from vaping to smoking, and the growing percentage of using e-cigs are also important considerations in this policy debate. E-cigs are considered to be harmful to youth due to the effect of nicotine on the developing brain and due to the potential for vaping to lead to
    nicotine addiction (regardless of whether or not the youth transitions to smoking). While the results from this study indicate that e-cigs may help adult smokers to quit smoking and thus lead
    to a decrease in smoking-related harms, this needs to be balanced against the goal of reducing vaping and nicotine use among youth. Deterrents to adolescent use include raising the national minimum purchase age to 21, allocating resources to enforcing that law, enacting stiff fines for violating it, and banning flavors and marketing targeted at youth. The public health benefits of
    not taxing e-cigarettes must be weighed against effects of this decision on efforts to reduce vaping by youth.

    1. These comments don’t really dispute my claim. They merely go to the magnitude of the effect.

      1. I disagree.

        There are potential health effects from both vaping and cigarette smoking.

        Talking about adults first, a tax on vaping has the following effects:

        1. Some vapers will quit.
        2. Some potential vapers will be dissuaded.
        3. Some will switch to cigarettes, including those who were using e-cigs to try to quit.

        Items 1 and 2 are probably beneficial, while 3 is probably harmful.

        Without knowing the numbers, and the relative effects on individuals we can’t say that net deaths will increase. The numbers are not in the study.

        Now, you might assume that the health effects of vaping are negligible relative to those of cigarette smoking. I don’t have any idea if that’s true or not, but say it is. You still have the negative effect on non-adults, which again is not quantified at all in the paper. Indeed, the paper explicitly mentions the need for balancing these effects. Remember that part of the issue with teen vaping is the progression to cigarette smoking.

        So there really is a question of the direction as well as the magnitude of the effect of the tax.

        1. Guess you missed this part, “This study is consistent with prior research finding that restrictions on youth access to e-cigarettes increases teen smoking rates.”

          The numbers from other studies also indicate that vaping is not leading to teen smoking as the rate of reduction in teen smoking rates increased with the availability of e-cigarettes. Moreover, studies on the harm of vaping versus smoking show that vaping is AT LEAST 95% less harmful than smoking.

          1. I think this should be viewed in terms of teen nicotine addiction rather than just “smoking.” If switching to vaping is “quitting smoking,” then so is switching to chewing tobacco. Arguing over the drug delivery system is just a distraction.

            When it comes to teens and tobacco, the question should be whether access to vaping devices gets them addicted at higher rates than cigarettes.

            “30.7 percent of e-cig users started smoking within 6 months while 8.1 percent of non users started smoking. Smoking includes combustible tobacco products (cigarettes, cigars, and hookahs).”

    2. Agreed on the obviousness of substitution – one only need look at the misnamed opioid crisis to see fentanyl substitutes for heroin.

      While i see your point about vaping having a lower non-price barrier to entry (it doesn’t taste like eating a fire pit) I’m not aware of anything on children or other age-dependent factors controlling non-use to minor-use to major-use. Not to say it doesn’t exist, just that I haven’t seen it – and this isn’t an area I’ve studied so my ignorance doesn’t tell me much – I wouldn’t expect to know about it if it existed have you seen anything along those lines? I would expect the same rule applies to alcohol as well – what’s the transition barriers by age between wine coolers to straight rum to whisky?

      1. The difference is, alcohol is far more dangerous and deadly than vaping. 🙂

        1. Which is why, as many others have observed, if we were to write the controlled substances act without any prior cultural norms alcohol would be in Schedule 1 (always prohibited), while nicotine would be in either schedule 4 or unscheduled -right next to caffeine.

          But that’s where our current restrictions are absurd. If alcohol is readily available with minimal restrictions then anything less dangerous should be too.

          1. Fun fact 1: LD50 values (oral) for common substances, for a 75 kg human. (LD50 = Lethal dose for 50% of people).

            Water: 6000 grams.
            Ethanol: ~225 grams
            Caffeine: ~12 grams
            Nicotine: ~1 gram.

            Fun fact 2: Of these 4 compounds, ethanol is most highly regulated, followed by nicotine, caffeine, then water.

            1. LD50 is one hazard metric. Another is number of annual deaths. The CDC says “There are 2,200 alcohol poisoning deaths in the US each year.”

              It’s harder to find annual deaths for nicotine and caffeine, because they are so rare. The sources I found were talking single digit numbers.

              Bottom line: LD50 isn’t particularly correlated with deaths, even for widely used substances.

              1. Fun Fact 2: Available dosing options affect deaths.

                Alcohol poisoning is more present because alcohol is generally available in very high concentrations (up to 95% for grain alcohol, 40% for common spirits). Downing ~300 mL of a liquid (for 95% grain alcohol) is fairly easy. If instead, alcohol was only available as a max 14% solution (most wine tops out there) alcohol poisoning would be far more rare. Then you’d need to drink a lot in very short succession (1.5 L+). And remember, it’s got to be fast, not over a few hours.

                Caffeine is mostly found as a solution (coffee) at a fairly low concentration (~40 mg per 100 mL water). Doing the math, to get a lethal dose would require drinking more than 10 L of coffee. Again, difficult. Most Caffeine overdoses occur with more concentrated forms. Pills, solid caffeine powders, etc. If you went to 5-Hour energy for example, that’s ~500 mg caffeine in 100 mL. Down a liter of 5-Hour energy, that’s 5 grams caffeine, and you’re starting to get into a danger zone.

                Water’s pretty self explanatory

                Nicotine gets interesting. Nicotine is primarily available as a solid, in a cigarette, which makes it difficult to ingest (Plus no one wants to). It’s also a fairly low amount inhaled by smoking (~1 mg per cigarette) But Nicotine, among all these options, is the only one that can be absorbed through the skin. And those little e-cases for vaping contain quite a bit. That little 10 mL bottle of 20 mg/ml nicotine refill represents 20% to 40% of the lethal dose (500 to 1000 mg). As a liquid that can be easily ingested…or spilled on the skin. The e-vaping can get truly massive “hits” of nicotine going. (To be continued)…

                1. Fun Fact 3: E-vaping can massively increase the nicotine concentration.

                  For years, big tobacco tried to increase the hit of nicotine a cigarette could provide. And by most estimates, they mostly managed to double it. It’s hard…you’ve got to naturally engineer the Tobacco plant to make more nicotine. Think of it as akin to a beer maker getting a stronger beer. The yeast still have to survive, and so on.

                  But with e-vaping, there’s really no limit to the concentration of the nicotine hit they can provide. The nicotine is chemically separated from the plant, and super-concentrated into a solution to be vaporized and inhaled. It’s what distilling was to the alcohol industry. Science managed to take the addictive substance and massively concentrate it.

                  E-vaping has the potential to do to nicotine addiction and poisoning what distilling did to alcohol. Make it far, far more dangerous.

  2. Sigh.

    1.) Vaping really is bad for you. Not as bad a smoking a cigarette. But really quite bad. Current studies put it on a level with smokeless tobacco (IE chewing tobacco). For the record, chewing tobacco is responsible for over 250,000 deaths per year from cancer and cardiovascular reasons.

    2). Studies have shows that Vaping isn’t really a good smoking cessation product. In a recent study, those of those who try it for smoking cessation, ~82% go back to smoking cigarettes within a year. Of those 18% who “just” vape, ~80% keep inhaling the nicotine. Other smoking cessation products are far superior.

    3. Vaping (nicotine) has MAJOR deterimental effects on the adolescent and teen brain, from a number of studies

    4. Vaping (nicotine) is hitting massive levels among teen youth. Up near 30% inhaling nicotine. These are levels of nicotine addiction not seen since the late 1970s. This is not simply “replacement” of other nicotine products but a massive new number of teens inhaling nicotine.

    1. 1 and 2 are just wrong. Studies have shown that vaping is at least 95% safer than standard cigarettes, that is not true of smokeless tobacco. Of the success rates for smoking cessation, vaping is the clear winner. For 3, where is the crackdown on youth caffeine use? For 4 (but really all of these), it is well established that the problems associated with tobacco use are mostly due to the problems associated with other chemicals in the tobacco, especially when combusted, not the nicotine.

      1. Could you point us to these studies?

      2. While the other comment is awaiting moderation…

        Here’s a well referenced review.

        If you want to link your studies, go ahead

    2. “Current studies put it on a level with smokeless tobacco (IE chewing tobacco). For the record, chewing tobacco is responsible for over 250,000 deaths per year from cancer and cardiovascular reasons.”

      Your wiki link claims that, “The risk of early death is anticipated to be similar to that of smokeless tobacco.”

      I don’t know what “anticipated” means in this context. The study they cite is behind a paywall, but the abstract says, “Methods: We collected 81 statements from international health organizations. Two coders independently performed qualitative content analysis to categorize e-cigarette recommendations.”

      I’m not sure how they can support this claim using these methods.

      1. I suppose they could just wait 50 years, until a new generation of people have died instead to definitively prove the study. Seems harsh though.

    3. Vaping isn’t a smoking cessation tool for teens; it’s the next addicted generation of customers for the tobacco companies.