Flavorants and addiction: An empirical analysis of cigarette bans and taxation

We evaluate the proposed FDA menthol cigarette ban using aggregate-level retail data and micro-level household data. The model incorporates addiction and household heterogeneity, with a focus on low-income households and the Black community, who consume menthol cigarettes the most. The ban reduces cigarette usage by 12.6% and the Black smoking rate by 35%, while demand for e-cigarettes and cessation products increases by 4.9% and 1.7%, respectively. A $1.02-per-pack cigarette sales tax is as effective as the menthol cigarette ban in reducing cigarette usage, while resulting in a smaller reduction in consumer surplus across most demographic groups, especially Black Americans. Including non-tobacco flavored e-cigarettes in the ban reduces cigarette consumption similarly, while e-cigarette usage decreases by 46%.