Study finds tax hikes on e-cigarettes encourage smoking among youth

In May this year, Jama Pediatrics published research showing that San Francisco’s ban on flavored electronic tobacco products nearly doubled youth smoking rates. The National Bureau of Economic Research (NBER) has published a working paper showing similar results.

Specifically, according to the study, while taxes on Electronic Nicotine Delivery Systems (ENDS) were found to reduce the use of such products, they encouraged youths to substitute for smoking.

Econ 101: The Substitution Effect

Economically speaking, electronic tobacco products and traditional cigarettes are substitutes. Any policy that increases (decreases) the cost of e-cigarettes compared to combustible cigarettes would discourage (encourage) smokers from switching to e-cigarettes.

Indeed, when Minnesota imposed a 95 percent wholesale tax on vapor products, more than 30,000 smokers were deterred from transitioning into e-cigarettes. This is concerning because even though nicotine is addictive, it is not a particularly harmful drug.

According to the FDA, “it is the mix of chemicals” from tobacco and tobacco smoke that “causes serious disease and death in tobacco users, including fatal lung diseases, like chronic obstructive pulmonary disease (COPD) and cancer,” and not nicotine itself.

Other tobacco products that do. not employ combustion, produces little to no toxins compared to smoking. In fact, studies have estimated e-cigarettes to be as much as 95 percent less harmful than traditional cigarettes. This means that policies that discourage switching to e-cigarettes put people’s health at risk.