- Can Anti-Vaping Policies Curb Drinking Externalities? Evidence from E-Cigarette Taxation and Traffic Fatalities
Teenage drinking is a top public health concern, generating social costs of over $28 billion per year, including substantial external costs associated with alcohol-related traffic fatalities. At the same time, the high rate of electronic cigarette (“e-cigarette”) use among teenagers has become a public health concern, with state and local policymakers turning to e-cigarette taxes as a tool to curb consumption. This paper is the first to explore the spillover effects of e-cigarette taxes on teenage drinking and alcohol-related traffic fatalities. Using data from five nationally representative datasets (the state and national Youth Risk Behavior Surveys, the Behavioral Risk Factor Surveillance Survey, the National Survey on Drug Use and Health, and the Fatality Analysis Reporting System) spanning the period 2003-2019, and a difference-in-differences approach, we find that a one-dollar increase in e-cigarette taxes is associated with a 1-to-2 percentage-point reduction in the probability of teenage binge drinking, and a 0.4 to 0.6 decline in the number of alcohol-related traffic fatalities per 100,000 16-to-20-year-olds in a treated state-year. A causal interpretation of our estimates is supported by (1) event-study analyses that account for heterogeneous and dynamic treatment effects, and (2) null effects of e-cigarette taxes on non-alcohol-related traffic fatalities.