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 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.
-
-
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
More from the NBER
In addition to working papers, the NBER disseminates affiliates’ latest findings through a range of free periodicals — the NBER Reporter, the NBER Digest, the Bulletin on Health, and the Bulletin on Entrepreneurship — as well as online conference reports, video lectures, and interviews.
