Intended and unintended effects of e-cigarette taxes on youth tobacco use

In 2009, public health officials in the United States established Healthy People 2020 goals, one of which was to reduce the youth smoking rate from 19.5% to 16.0% by 2019 (HealthyPeople.gov, 2020). In the introduction to a 2012 Surgeon General report on smoking, Department of Health and Human Services Secretary Kathleen Sebelius warned that “…youth and adult smoking rates that had been dropping for many years have stalled” (US Department of Health Human Services, 2012). This situation quickly changed, however, as youth smoking rates fell to 6.0% by 2019, thus surpassing the Healthy People 2020 objective by 386%. What caused such an unanticipated decline in youth cigarette smoking?¹ One candidate is the introduction of electronic cigarettes and other electronic nicotine delivery systems (“ENDS”). ENDS were first imported into the US in August 2006 (CASAA, 2020) and overtook cigarettes as the most commonly used tobacco product among youth in 2014 (Pesko and Warman, 2021). In 2019, 32.9% of youth used an ENDS over the past 30 days, while 10.7% used ENDS frequently; that is, on 20 or more of the past 30 days (Centers for Disease Control and Prevention, 2020).

On the whole, the current scientific consensus is that ENDS are likely substantially less dangerous than combustible tobacco products (e.g., cigarettes), which are estimated to kill 480,000 Americans annually (US Surgeon General, 2014). However, the exact relative risks remain uncertain. Based on data from an August 2020 survey of 137 tobacco scholars, the mean (median) tobacco expert believed that the effect of vaping ENDS on quality-adjusted life expectancy was 37% (25%) as large as the effect of smoking (Allcott and Rafkin, 2021). Accounting for harms to others as well as the user, a 2013 expert panel concluded that ENDS were unlikely to exceed 5% of the harm of cigarettes (Nutt et al., 2014), a statistic cited in subsequent reviews of evidence on ENDS’ effects sponsored by Public Health England (McNeill et al., 2018). While the US debate does not use a specific estimate for these products’ relative risks, the National Academies of Sciences, Engineering, and Medicine’s 2018 report concluded that “…e-cigarettes appear to pose less risk to an individual than combustible tobacco cigarettes” and “…e-cigarette aerosol contains fewer numbers and lower levels of toxicants than smoke from combustible tobacco cigarettes.” Health costs may be higher, however, for informally sourced ENDS products than mainstream commercial ENDS because of unknown additives.

ENDS may affect youth health differently than adult health. One commonly cited reason is the potential deleterious effects of nicotine on youth brain development. However, as this evidence is based mostly on studies of rodents (US Surgeon General, 2016), the relationship’s generalizability to humans is unclear (Balfour et al., 2021). Similarly, the magnitude of the danger posed by nicotine compared to other substances like alcohol, tetrahydrocannabinol (THC), caffeine, and sugar on adolescent brain development is also unclear.

Another commonly-voiced concern is the 2016 Surgeon General report’s conclusion that “…e-cigarette use is strongly associated with combustible tobacco product use” (US Surgeon General, 2016). However, the idea that this association reflects a causal effect of ENDS use on subsequent smoking is inconsistent with the typical directionality of uptake over time—daily smoking is more common among young adults who tried cigarettes before ENDS (Friedman et al., 2019; Etter, 2018). This stated association also fails to accurately forecast rapidly declining youth cigarette use. Despite causal evidence that reducing ENDS access increases youth smoking (Pesko, 2022b), the Surgeon General has declared high rates of youth ENDS use to be an epidemic (US Surgeon General, 2018).

Policies designed to reduce access to ENDS therefore appear to prioritize the goal of reducing nicotine use—nicotine which has limited adverse effects on health outside of causing addiction—over the goal of harm reduction, which recognizes substitution from higher to lower-risk nicotine products by people who would not otherwise be able to quit as a benefit for public health. Such regulations have been increasing over time, beginning with ENDS minimum legal sales ages of 18 or higher implemented in all states between 2010 and 2016. As of March 2022, 30 states had adopted ENDS taxes (Public Health Law Center, 2022) while 23 had added ENDS to their existing indoor smoking laws (American Non-Smokers Rights Foundation, 2021).

Despite significant interest in the effect of regulation on youth ENDS use, studies have not yet estimated the effect of ENDS taxes on youth ENDS and combustible tobacco product use. We explore this question using two nationally representative datasets: Monitoring the Future (MTF) and the Youth Risk Behavior Surveillance System (YRBSS). Specifically, we use a continuous treatment difference-in-differences research design to estimate the relationship between ENDS taxes and a variety of outcomes, including ENDS use, combustible tobacco product use, sources of ENDS products (e.g., online purchasing, brick-and-mortar retailers, social sources), and perceived risk of ENDS use. In both MTF and YRBSS, we find that ENDS taxes reduce youth ENDS use and raise youth cigarette use, with evidence of particularly large effects on using these products regularly. We also find evidence that ENDS taxes raise perceptions of ENDS risk and shift the manner that youth obtain ENDS from retail sources to social sources.

By documenting both intended and unintended effects of ENDS taxation on youths, this study’s findings contribute to determining optimal ENDS tax policy. In particular, our results speak directly to the question of whether ENDS accessibility reduces youth combustible tobacco use. If this indirect effect on youth tobacco use is positive and large, and the direct harms of ENDS use are small, then imposing large taxes on ENDS products could conceivably worsen public health on net.