The Effects of Traditional Cigarette and E-Cigarette Tax Rates on Adult Tobacco Product Use

Pesko, Michael F., Charles J. Courtemanche, and Johanna Catherine Maclean. "The effects of traditional cigarette and e-cigarette tax rates on adult tobacco product use." Journal of Risk and Uncertainty 60, no. 3 (2020): 229-258.

Andrew Young School of Policy Studies Research Paper Series Forthcoming

56 Pages Posted: 14 May 2021

See all articles by Michael Pesko

Michael Pesko

Georgia State University - Department of Economics

Charles Courtemanche

University of Kentucky

Catherine Maclean

Temple University

Date Written: May 2020

Abstract

We study the effects of traditional cigarette and e-cigarette taxes on use of these products among adults in the United States. Data are drawn from the Behavioral Risk Factor Surveillance System and National Health Interview Survey over the period 2011 to 2018. Using two-way fixed effects models, we find evidence that higher traditional cigarette tax rates reduce adult traditional cigarette use and increase adult e-cigarette use. Similarly, we find that higher e-cigarette tax rates increase traditional cigarette use and reduce e-cigarette use. Cross-tax effects imply that the products are economic substitutes. Our results suggest that a proposed national e-cigarette tax of $1.65 per milliliter of vaping liquid would raise the proportion of adults who smoke cigarettes daily by approximately one percentage point, translating to 2.5 million extra adult daily smokers compared to the counterfactual of not having the tax.

Keywords: smoking, e-cigarettes, taxation, elasticity

JEL Classification: H2, I12, I18

Suggested Citation

Pesko, Michael and Courtemanche, Charles and Maclean, Catherine, The Effects of Traditional Cigarette and E-Cigarette Tax Rates on Adult Tobacco Product Use (May 2020). Pesko, Michael F., Charles J. Courtemanche, and Johanna Catherine Maclean. "The effects of traditional cigarette and e-cigarette tax rates on adult tobacco product use." Journal of Risk and Uncertainty 60, no. 3 (2020): 229-258., Andrew Young School of Policy Studies Research Paper Series Forthcoming, Available at SSRN: https://ssrn.com/abstract=3844276 or http://dx.doi.org/10.2139/ssrn.3844276

Michael Pesko (Contact Author)

Georgia State University - Department of Economics ( email )

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

Charles Courtemanche

University of Kentucky ( email )

Catherine Maclean

Temple University ( email )

Philadelphia, PA 19122
United States

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