Newly published research led by a University of Wisconsin Oshkosh professor might cause policymakers to pause the next time implementing e-cigarette taxes are up for debate.
The Effects of E-Cigarette Taxes on E-Cigarette Prices and Tobacco Product Sales: Evidence from Retail Panel Data, published this month by Journal of Health Economics, features Chad Cotti as lead author. Cotti is an economics professor and serves as chair of the economics department in the UW Oshkosh College of Business.
The team of researchers, consisting of six health economists with experience examining risk behaviors and consumer habits, used NielsenIQ Retail Scanner data from 2013 to 2019 to explore the consequences of taxes on e-cigarettes. The nicotine products—the use of which is often referred to as vaping—exploded in popularity among teens and young adults in recent years.
As vaping has surged in popularity, so too have concerns from public health officials and policymakers that these tobacco-free products act as a gateway to traditional tobacco products. E-cigarettes are the latest in a line of “sin activities,” like tobacco and alcohol, to be considered for taxation by legislators. As of early this summer, 30 states and Washington D.C. have enacted e-cigarette taxes, Wisconsin included.
What Cotti and the team of researchers found, though, is the two types of products are economic substitutes. So when e-cigarette taxes are implemented, smokers tend to turn to traditional cigarettes.
And so if the goal is reducing the use of all nicotine products, e-cigarette taxes don’t seem to be the answer.
“You want your work to have some meaning and possibly inform the discussion,” Cotti said. “That’s what we’re hoping for—for the work to inform the discussion.”
The study was funded by the National Institutes of Health and an earlier version was published in 2020 by the National Bureau of Economic Research.