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Are E-Cigarette Taxes Losing their Bite?

Author

Listed:
  • Dhaval M. Dave
  • Tessie Krishna
  • Yang Liang
  • Joseph J. Sabia

Abstract

The rise in nicotine vaping among U.S. teenagers in the late 2010s prompted tobacco control advocates to press for higher electronic nicotine delivery system (ENDS) taxes to curb their use. This study is the first to explore how the effectiveness of e-cigarette taxation as an anti-vaping policy tool has evolved over time. Using data from several nationally representative data sources and a generalized difference-in-differences approach, we find that since 2020, the effectiveness of a one dollar increase in ENDS taxes in curbing youth nicotine vaping has declined by over 50 percent. This finding is consistent with the marginal youth vaper becoming more tax inelastic over time. Descriptive evidence shows that the composition of youth ENDS users appears to have shifted toward those with a higher addictive stock and a greater taste for risk, which could make youths less tax responsive. For adults, where nicotine vaping rates are stable or slightly rising and compositional shifts are somewhat less pronounced, we find much less evidence that ENDS tax effectiveness has changed over time.

Suggested Citation

  • Dhaval M. Dave & Tessie Krishna & Yang Liang & Joseph J. Sabia, 2025. "Are E-Cigarette Taxes Losing their Bite?," NBER Working Papers 34544, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:34544
    Note: CH EH LE PE
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    More about this item

    JEL classification:

    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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