Over the past decade, rising youth use of e-cigarettes and other electronic nicotine delivery systems (ENDS) has prompted aggressive regulation by state and local governments. Between 2010 and 2019, ten states and two large counties adopted ENDS taxes. Applying a continuous treatment difference-in-differences approach to data from two large national datasets (Monitoring the Future and the Youth Risk Behavior Surveillance System), this study explores the impact of ENDS taxes on youth tobacco use. We find that ENDS taxes reduce youth e-cigarette consumption, with estimated e-cigarette tax elasticities of -0.06 to -0.21. However, we estimate sizable positive cigarette cross-tax elasticities, suggesting economic substitution between cigarettes and e-cigarettes for youth. These substitution effects are particularly large for frequent cigarette smoking. We conclude that the unintended effects of ENDS taxation may more than fully offset any public health gains.
Working Paper Number
Working Paper 41
Research reported in this publication was supported by the National Institute on Drug Abuse of the National Institutes of Health under award number R01DA045016 (PI: Michael Pesko), R01DA039968 (PI: Dhaval Dave), and an Evidence for Action grant from the Robert Wood Johnson Foundation (grant #74869; PI: Friedman). Dr. Sabia acknowledges support from San Diego State University’s Center for Health Economics & Policy Studies (CHEPS), Dr. Courtemanche acknowledges support from the University of Kentucky’s Institute for the Study of Free Enterprise, and Dr. Abouk acknowledges support from William Paterson University’s Cannabis Research Institute.
Abouk, Rahi; Courtemanche, Charles J.; Dave, Dhaval; Feng, Bo; Friedman, Abigail S.; Maclean, Johanna Catherine; Pesko, Michael F.; Sabia, Joseph J.; and Safford, Samuel, "Intended and Unintended Effects of E-cigarette Taxes on Youth Tobacco Use" (2021). Institute for the Study of Free Enterprise Working Papers. 40.
JEL codes: H2; I1; I18