The Effect of Prices and Taxes on Youth Cigarette and E-cigarette Use: Economic Substitutes or Complements?

32 Pages Posted: 30 Nov 2017 Last revised: 25 Nov 2019

See all articles by Michael Pesko

Michael Pesko

Georgia State University - Department of Economics

Casey Warman

Dalhousie University

Date Written: September 5, 2017

Abstract

We explore the effect of e-cigarette prices and an e-cigarette tax increase in Minnesota on youth use of e-cigarettes and cigarettes. Our price variation comes from 35,000 retailers participating in the Nielsen retail data system. We match this price and tax variation to survey data on current use of e-cigarettes and cigarettes for over 80,000 11-17 year olds from the National Youth Tobacco Survey (NYTS) for years 2011 to 2015. We find evidence that higher e-cigarette taxes and refill prices reduce youth e-cigarette use. Disposable e-cigarette prices reduce e-cigarette use for older teens. Cross-price/tax effects also support substitution between these two products. Our results suggest that taxing e-cigarettes may have an unintended consequence of increasing youth smoking intensity and that youth may continue obtaining nicotine following cigarette tax increases by using e-cigarettes.

Keywords: E-cigarette; Tobacco control; Smoking; Vaping; Youth substance use; Tax policy

JEL Classification: I180, H710

Suggested Citation

Pesko, Michael and Warman, Casey, The Effect of Prices and Taxes on Youth Cigarette and E-cigarette Use: Economic Substitutes or Complements? (September 5, 2017). Available at SSRN: https://ssrn.com/abstract=3077468 or http://dx.doi.org/10.2139/ssrn.3077468

Michael Pesko (Contact Author)

Georgia State University - Department of Economics ( email )

P.O. Box 3992
Atlanta, GA 30302-3992
United States

Casey Warman

Dalhousie University ( email )

Halifax, Nova Scotia B3H 3J5
Canada

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