Study says cigarettes, e-cigarettes are economic complements, not alternatives

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A new study from Ball State says that by raising taxes on cigarettes, the sales on e-cigarettes fall too, even though they aren't covered under the same tax.

About 15 percent of the United States population has a smoking habit according to the CDC. For a better number, that's 37.8 million people buying cigarettes regularly. When a Ball State study tracked household purchases for almost 100,000 homes over 4 years, they saw a few trends with smokers that people could have told you without the study.

"When cigarette taxes go up, households reduce their cigarette purchases," Associate Professor Erik Nesson said.

If it costs more, you're buying less. But there were also things the study found that you wouldn't expect.

In today's world there are alternatives to cigarettes if you really need a fix, but this study found out that if cigarette sales go down, things like e-cigarettes go down too, even when they aren't covered by the same higher tax.

"This suggests that cigarettes and e-cigarettes are what are called economic complements rather than being economic substitutes," Nesson said.

The reason for all of that may just be because cigarettes are the more popular form of getting nicotine.

"People might just reduce their overall consumption of nicotine," Nesson said. "So they might just stop smoking so many cigarettes and then because they're not ingesting so much nicotine, also reduce their consumption of e-cigarettes as well. And that seems to be what's happening."

The study says that policies focused on e-cigarette laws probably won't affect smokers all that much, but by putting pressure on cigarette taxes, the smoking rate across america should drop.

"Cigarette taxes are certainly a very effective way to reduce cigarette consumption," Nesson said. "I would say that they're probably the most effective way to reduce cigarette consumption."

That doesn't mean taxes are going up any time soon, Nesson just says he wants policymakers to understand the relationship between cigarettes and e-cigarettes when looking at smoking laws.

For a full look at the study you can check out https://www.sciencedirect.com/science/article/abs/pii/S0167629618301565