Clearing the Air: An economic perspective on Iowa's vaping bill

This column aims to help the public understand the potential impact of a bill to regulate vape products in Iowa. But first, a disclosure: I do not smoke. I do not vape. I just understand economics.

Smoking is harmful and addictive, so we should continue pursuing policies that reduce smoking in Iowa. One approach is to support efforts to quit smoking by replacing cigarettes with vape. However, we must balance this approach with restrictions on vape products to prevent kids from becoming addicted to nicotine. The Iowa House Bill aims to prohibit the sale of unregulated vape products, which are often flavored and attractive to kids. The vape trade association has, unsurprisingly, lobbied against the bill. So have public health advocates. The surprising opposition from public health advocates draws from a claim that the bill will not reduce youth tobacco or vape use. I disagree. In fact, using simple economic theory I predict that this bill will reduce vape use and possibly even cigarette smoking.

Two things influence vape use: the demand for and supply of vape products. This bill directly affects the supply. I predict that first, by introducing a regulation which carries administrative fees and financial penalties, the cost of supplying vape products will increase. Because of the increase in costs, many unauthorized vape products will no longer be sold and many stores will stop selling vape products. Second, the remaining vape products and stores selling vape products will have a higher market share, potentially allowing them to charge higher prices. These higher prices will further reduce vape use.

From a public health perspective, the only potential downside to this bill is how it might affect cigarette smoking. Consider the people who reduced their vape use given the decline in supply and increase in prices: will these people replace vape products with cigarettes? Many will not, but even among those who do, the substitution will not be symmetric. Substitution from vape products to cigarettes will be even less likely if the price of cigarettes increases. Prices might increase naturally, as cigarette suppliers gain greater market share when vape suppliers leave the market. As a precaution, policymakers could also increase cigarette prices by raising Iowa’s cigarette tax.

Policies should not be judged by their goals, but their consequences. By raising the cost of supplying vape products, the proposed bill will reduce the availability and consumption of vape products in Iowa, while also raising revenue for tobacco cessation and prevention programs. This bill will reduce smoking in adults and vape use among kids, but I am not surprised by its opposition. Not everyone understands economics.

Jason Semprini received his Ph.D. in health services and policy at the University of Iowa and studied economics at the University of Chicago where he earned his Masters in Public Policy.