Are E-Cigarette Taxes Losing their Bite?
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 impact of e-cigarette taxation on youth nicotine vaping 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 effect of a one dollar increase in electronic nicotine delivery systems (ENDS) taxes on teenage ENDS use has declined by over 50 percent. This erosion in tax responsiveness is consistent with the marginal youth vaper becoming more tax inelastic over time. Descriptive evidence shows that the composition of youth ENDS users has shifted toward those with a higher addictive stock and a greater taste for risk, factors that, in part, may make current youth vapers less tax responsive. In contrast, for adults, for whom there is less evidence of decline in ENDS use or such compositional shifts, their behavioral response to ENDS taxation has remained largely unchanged over time.
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Copy CitationDhaval M. Dave, Tessie Krishna, Yang Liang, and Joseph J. Sabia, "Are E-Cigarette Taxes Losing their Bite?," NBER Working Paper 34544 (2025), https://doi.org/10.3386/w34544.Download Citation
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