Adult smokers' demand for electronic cigarettes: Evidence from a discrete choice experiment

This study applies a discrete choice experiment (DCE) to e-cigarette demand in a sample of adult smokers.  E-cigarettes, which entered the U.S. market in 2007, represent a thorny issue for policy makers.  On one hand, e-cigarettes may offer smokers a pathway towards abstinence or an option to continue smoking, but in a less harmful manner to both themselves and those with whom they interact.  On the other hand, e-cigarettes may deter/delay smokers from transitioning to smoking abstinence and/or encourage youth to initiate into tobacco smoking through a gateway effect.  To determine appropriate regulation of e-cigarettes policy makers must understand how smokers make decisions regarding their purchases of e-cigarettes vis-a-vis tobacco cigarettes.  

Given the newness of e-cigarettes in U.S. markets, high quality revealed preferences data on these products is not available yet.  Therefore, we adopt a novel, survey-based stated preferences approach.  More specifically, we conduct an online DCE to examine the relative importance of key attributes of e-cigarettes that are directly relevant to, or can be affected by policymakers: price, health harms relative to tobacco cigarettes, bans in public venues, and potential as a cessation device.  We ask 1,500 adult smokers to make hypothetical purchasing choices between three cigarette types: a tobacco cigarette, a disposable e-cigarette, and a rechargeable e-cigarette.  Our DCE allows us to understand the trade-offs adult smokers make between these attributes, estimate willingness to pay for product attributes, identify different types of smokers, and make predictions regarding the impact of different regulatory regimes that are being considered but have not necessarily yet been implemented.  We estimate a conditional logit model and a latent class logit model to study these questions. 

Our findings suggest that adult smokers are less likely to choose a cigarette – tobacco or electronic – as its price increases.  Moreover, smokers value the ability to use e-cigarettes in public venues, relative healthiness of e-cigarettes, and effectiveness of e-cigarettes as a cessation device.  We identify several types of smokers based on preferences for tobacco cigarettes and e-cigarettes.  Policy simulations suggest that regulation of the e-cigarette attributes considered here can have substantial implications on the market shares of tobacco cigarettes and e-cigarettes among adult smokers.  Therefore, findings from our study have important regulation and public health implications as Federal, state, and local governments determine how best to regulate e-cigarettes to promote public health.