April 28, 2021

Price Could Deter Young Users Matthew Rousu, left, and Bailey Hackenberry ?21, right Matthew Rousu, left, and Bailey Hackenberry ’21, right

New research from Susquehanna University’s Sigmund Weis School of Business finds that electronic cigarettes, which have grown in popularity among teenagers, could be priced or taxed to the point of dissuading use of the products.

Matthew Rousu, dean of the business school, and Bailey Hackenberry ’21, an economics and finance double major, published their article, Estimating the Price Elasticity of Demand for JUUL E-cigarettes among Teens, in the journal Drug and Alcohol Dependence.

Although e-cigarettes have been found to be less harmful than traditional cigarettes, nicotine, a highly addictive substance with wide-ranging adverse health effects, is still the primary chemical in both products. Additionally, in 2015, the U.S. surgeon general reported that e-cigarette use among high school students had increased by 900%, and 40% of young e-cigarette users had never smoked regular tobacco before using e-cigarettes.

“The widespread popularity of e-cigarettes has led to an alarming increase in teen nicotine use, reversing a 40-year trend,” Rousu said. “One key question is how sensitive teens’ demand for e-cigarettes is to changes in price.”

To answer this question, Hackenberry and graduate Kyle Kern ’19 gave participants, all 18-19 years old, $20 and asked them how much they would be willing to pay for e-cigarette products. The price randomly varied per participant.

“We found that a 10% increase in price led to as much as a 24% reduction in demand among teens using nicotine, and as much as a 45% reduction among teens not currently using nicotine,” Hackenberry said. “The teens in our study were more price sensitive than older adults who took part in a similar study earlier.”

From a public health standpoint, these are promising results, Rousu said.

“High e-cigarette taxes may dissuade relatively few older adult cigarette smokers from switching to e-cigarettes,” he said, “but at the same time, a carefully calibrated e-cigarette tax could be highly effective at preventing teens from becoming e-cigarette users in the first place.”

This research was funded by a grant from the National Institutes of Health.