Which smokers adopt e-cigarettes and at what price? An experimental estimation of price elasticity of demand and factors correlated with e-cigarette adoption

Abstract

E-cigarette use has surged in recent years. Many of these new users are cigarette smokers. It is unclear whether e-cigarette adoption by smokers will lead to improved public health due to uncertainty about whether e-cigarettes help smokers quit using cigarettes and about whether ongoing dual use reduces exposure to toxins. A third source of uncertainty is whether providing cigarette smokers with sample e-cigarettes increases e-cigarette adoption. To provide insight into this final issue, we follow up with cigarette smokers who left an experimental auction with an e-cigarette, contacting them after two weeks, six weeks, and six months to determine which demographic and smoking-related characteristics predict continued e-cigarette use. We find that smokers who have made a serious quit attempt, have been advised to quit smoking, or have previously tried e-cigarettes are significantly more likely to report continued e-cigarette use. Women and smokers from racial and ethnic minority groups are significantly less likely to use e-cigarettes at follow up, as are those who said they would rather quit than switch to e-cigarettes. We also use experimental auction bids to estimate the price elasticity of demand for e-cigarettes, finding that a 10% increase in price results in a 5.6% reduction in quantity demanded. This suggests e-cigarette demand is less price sensitive than some earlier studies have found. While a tax on e-cigarettes can still be an effective tool for reducing e-cigarette demand, the reduction in demand may be smaller than some earlier studies would suggest.