The Effects of E-Cigarette Taxes on E-Cigarette Prices and Tobacco Product Sales: Evidence from Retail Panel Data

Cotti, Chad; Courtemanche, Charles; Maclean, Johanna Catherine; Nesson, Erik; Tefft, Nathan

doi:10.3386/w26724

Cited by 43 publications

(39 citation statements)

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“…Indeed, three recent studies show that e-cigarette taxes are more than fully passed through to consumers (Cotti et al 2020, Allcott and Rafkin 2020, Saffer et al 2020. For example, Cotti et al (2020) estimate a pass-through rate of 1.6 using sales data over the period 2011 to 2017. Increasing the price of a product by the law of demand will decrease the quantity consumed.…”

Section: Background and Related Literaturementioning

confidence: 99%

“…Several studies use variation in e-cigarette taxes to estimate cigarette own-and cross-tax elasticities. Cotti et al (2020) use data from the Nielsen Retail scanner data (NRSD) and show that a $1.00 increase in the e-cigarette tax reduces e-cigarette sales by 42% and increases traditional cigarette sales by 19%. Instrumenting prices with taxes, they also calculate an ecigarette own-price elasticity of -1.5 and a cross-price elasticity of 0.9.…”

Section: Background and Related Literaturementioning

confidence: 99%

“…Washington DC's tax is unique in that the ad valorem tax rate is set to match 100% of the traditional cigarette tax, suggesting that each one percentage point or 'ppt' of ad valorem tax is 4.3 cents. Following Cotti et al (2020), we use this relationship to convert e-cigarette ad valorem taxes into excise tax equivalents for each relevant locality. Please see the Online Appendix for a detailed discussion of our conversion process, which utilizes Nielsen Retail Scanner data.…”

Section: Data On E-cigarette Taxesmentioning

confidence: 99%

“…Our procedure was pioneered by Cotti et al (2020). Through 2018, e-cigarette taxes have been levied using either specific excise taxes or ad valorem taxes.…”

Section: Online Appendix: Standardizing E-cigarette Taxesmentioning

confidence: 99%

“…Chicago uses an excise tax on both liquid volume and the number of disposable or refill units sold. Several Alaskan counties also have e-cigarette taxes, but Alaska is not included in the Nielsen retail data and is therefore not included in our standardization exercise that follows Cotti et al (2020). Between the end of our study period in 2018 and the end of 2019, eight additional states adopted new e-cigarette taxes (Connecticut, Illinois, New Mexico, New York, Ohio, Vermont, Washington, and Wisconsin).…”

Section: Online Appendix: Standardizing E-cigarette Taxesmentioning

confidence: 99%

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The Effect of E-Cigarette Taxes on Pre-pregnancy and Prenatal Smoking

Adams¹,

Feng²,

Maclean³

2019

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We use the universe of birth records in the United States from 2013 to 2018 to examine the effect of e-cigarette tax rates on pre-pregnancy smoking and prenatal smoking. We study these questions using two-way fixed effects models and pregnancy fixed effects models. We show that e-cigarette taxes increase pre-pregnancy smoking, increase prenatal smoking, and lower smoking cessation during pregnancy. These findings imply that e-cigarettes and traditional cigarettes are substitutes among pregnant women. We also find evidence that e-cigarette taxes reduce prepregnancy and third trimester e-cigarette use.

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Section: Background and Related Literaturementioning

confidence: 99%

Section: Background and Related Literaturementioning

confidence: 99%

Section: Data On E-cigarette Taxesmentioning

confidence: 99%

“…Our procedure was pioneered by Cotti et al (2020). Through 2018, e-cigarette taxes have been levied using either specific excise taxes or ad valorem taxes.…”

Section: Online Appendix: Standardizing E-cigarette Taxesmentioning

confidence: 99%

Section: Online Appendix: Standardizing E-cigarette Taxesmentioning

confidence: 99%

See 3 more Smart Citations

The Effect of E-Cigarette Taxes on Pre-pregnancy and Prenatal Smoking

Adams¹,

Feng²,

Maclean³

2019

Self Cite

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Mostly harmless regulation? Electronic cigarettes, public policy, and consumer welfare

2020

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Electronic cigarettes are a less harmful alternative to combustible cigarettes. We analyze data on e-cigarette choices in an online experimental market. Our data and mixed logit model capture two sources of consumer optimization errors: overestimates of the relative risks of e-cigarettes and present bias. Our novel data and policy analysis make three contributions. First, our predictions about e-cigarette use under counterfactual policy scenarios provide new information about current regulatory tradeoffs. Second, we provide empirical evidence about the role consumer optimization errors play in tobacco product choices. Third, we contribute to behavioral welfare analysis of policies that address individual optimization errors. Compared with standard cost-benefit analysis, our behavioral welfare economics analysis leads to much larger estimates of the costs of policies that discourage e-cigarette use or the benefits of policies that encourage e-cigarette use. K E Y W O R D S behavioral welfare analysis, consumer optimization, electronic cigarettes, electronic nicotine delivery systems, tobacco control 1 | INTRODUCTION Electronic cigarettes and other vaping devices provide users with a vapor that contains nicotine without the combustion-generated toxicants in tobacco smoke. Vaping e-cigarettes is not harmless but poses much lower risks than smoking combustible tobacco. 1 The vaping market has rapidly evolved. The first modern vaping products were introduced in U.S. markets around 2007. Annual sales grew rapidly from $500 million in 2012 to $6.6 billion in 2018 (Cowen and Company Equity Research, 2019). In 2018 data for adults, 9.7% of current smokers, 25.2% of recent (past-year) former smokers, and 4.2% of nonrecent former smokers regularly vape, compared with 1.1% of never smokers. 2 The adult current smoking rate was 19.8% in 2007 when e-cigarettes were introduced into the U.S. market and has declined to 13.7% in 2018 (American Lung Association, 2020; Creamer et al., 2019). Public policy towards vaping is also evolving. Vaping products were regulated as ordinary consumer products until 2016. In May 2016, the FDA issued a rule phasing in regulation of vaping products as tobacco products (FDA, 2016). In early 2020, the FDA announced new enforcement priorities that amount to at least a temporary ban of cartridge-based flavored e-cigarettes (other than menthol) (FDA, 2020a). In addition to the FDA, states, counties, and municipalities 1 Section 2 below provides more discussion of the evidence on the relative risks of vaping and smoking. Unless otherwise stated, we refer to the action of using e-cigarette products as vaping and the action of using any combustible tobacco product as smoking.

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Re‐exploring the early relationship between teenage cigarette and e‐cigarette use using price and tax changes

Warman

2021

Health Economics

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Any opinions expressed in this paper are those of the author(s) and not those of IZA. Research published in this series may include views on policy, but IZA takes no institutional policy positions. The IZA research network is committed to the IZA Guiding Principles of Research Integrity. The IZA Institute of Labor Economics is an independent economic research institute that conducts research in labor economics and offers evidence-based policy advice on labor market issues. Supported by the Deutsche Post Foundation, IZA runs the world's largest network of economists, whose research aims to provide answers to the global labor market challenges of our time. Our key objective is to build bridges between academic research, policymakers and society. IZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author.

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The Effects of E-Cigarette Taxes on E-Cigarette Prices and Tobacco Product Sales: Evidence from Retail Panel Data

Cited by 43 publications

References 43 publications

The Effect of E-Cigarette Taxes on Pre-pregnancy and Prenatal Smoking

The Effect of E-Cigarette Taxes on Pre-pregnancy and Prenatal Smoking

Mostly harmless regulation? Electronic cigarettes, public policy, and consumer welfare

Re‐exploring the early relationship between teenage cigarette and e‐cigarette use using price and tax changes

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