The Effects of Tobacco Control Policies on Electronic Cigarette Purchases: Evidence from Household and Retail Scanner Data

The rapid increase in electronic cigarette use raises important economic and policy questions regarding the relationship between electronic cigarettes and traditional tobacco products.  Many public health officials express concerns that electronic cigarettes and traditional cigarettes are economic complements and that increased electronic cigarette use will lead to increased cigarette use.  While this may suggest that strict regulation or taxation of electronic cigarettes is a prudent policy, it could also be the case that electronic cigarettes and traditional cigarettes are economic substitutes and that strict regulation of electronic cigarettes could increase traditional cigarette consumption. 

Very little research exists on these important questions, largely because very little data exists on the prevalence of electronic cigarettes.  Our study will use the Nielsen Homescan Consumer Panel Dataset, the Nielsen Retail Scanner Dataset, and Google Trends searches for electronic cigarette-related terms as a proxy for internet purchases to answer many important economic and policy-related questions. First, we will examine whether tobacco control policies targeted at traditional cigarette affect electronic cigarette purchases.  We will examine cigarette excise taxes, smokefree air laws, and taxes on smokeless tobacco.  Second, we will examine whether smokefree air laws which are extended to electronic cigarettes affect electronic cigarette purchases and purchases of smokeless tobacco.

In preliminary results using the Nielsen Homescan Consumer Panel Dataset for the years 2011 through 2013, we find some evidence that cigarette tax increases lead to a decrease in electronic cigarette purchases, suggesting a complementary relationship. Additionally, we find some evidence that bar smokefree air laws increase electronic cigarette purchases. Lastly, we also find evidence that electronic cigarettes are substitutes for chewing tobacco and complements for snuff.  We anticipate that the retail scanner data will allow a deeper examination of these important questions.