Forbes: New Study Suggests E-Cigarettes Taxes Could Encourage Smoking

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New Study Suggests Raising Taxes On E-Cigarettes Could Encourage Traditional Smoking

Using data from 35,000 national retailers from 2011 to 2017, researchers found that for every 10% increase in e-cigarette prices, e-cigarette sales dropped 26%. But the same 10% increase in e-cigarette prices caused traditional cigarette sales to jump by 11%.

The math is even more complicated. It's the stuff of data analysis flashbacks/nightmares:

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But the conclusion, according to the study, may be simple: e-cigarettes are an elastic good. And since e-cigarettes and traditional cigarettes are economic substitutes, e-cigarette sales may increase as traditional cigarette taxes go up, and conventional cigarette sales may increase as e-cigarette taxes rise.

"We estimate that for every e-cigarette pod no longer purchased as a result of an e-cigarette tax, 6.2 extra packs of cigarettes are purchased instead," he said.

And while vaping-related illnesses are a public health concern, according to the CDC, traditional cigarettes continue to kill nearly 480,000 Americans each year. Some studies suggest that e-cigarettes contain fewer toxicants and are safer for non-pregnant adults than conventional cigarettes.

That poses an interesting dilemma. If raising taxes on e-cigarettes - the long-term effects of which are not wholly known - simply chases smokers to traditional cigarettes - which the CDC has determined to be "the leading cause of preventable death" - is it worth it?

You can read the study, "The Effects of E-Cigarette Taxes on E-Cigarette Prices and Consumption: Evidence from Retail Panel Data," from the National Bureau of Economic Research. The research team was made up of six economists