We study the effects of traditional cigarette tax rate changes and e-cigarette tax adoption on use of these products among US adults. Data are drawn from the Behavioral Risk Factor Surveillance System and National Health Interview Survey data over the period 2011to 2017. Using a difference-in-differences model, we find that higher traditional cigarette taxes reduce adult traditional cigarette use and increase adult e-cigarette use, suggesting that the products are economic substitutes. E-cigarette tax adoption reduces e-cigarette use, with some heterogeneity across groups, and dilutes the own-tax responsiveness of traditional cigarettes.
Working Paper Number
Working Paper 22
Pesko, Michael F.; Courtemanche, Charles J.; and Maclean, Joanna Catherine, "The Effects of Traditional Cigarette and E-Cigarette Taxes on Adult Tobacco Product Use" (2019). Institute for the Study of Free Enterprise Working Papers. 8.
JEL codes: H2, I12, I18