The Impact of Electronic Cigarettes on Cigarette Smoking By Americans and Its Health and Economic Implications

EXECUTIVE SUMMARY

Cigarette smoking by Americans declined steadily from the mid-1960s to around 2005, when this progress began to slow. From 2013 to 2017, however, cigarette smoking rates fell sharply, during a period in which the use of electronic cigarettes or e-cigarettes increased sharply. This study examines the connection between these two developments and the implications.

  • Among adults, cigarette smoking rates fell from 18.0% in 2013 to 14.0% in 2017, while the use of e-cigarettes increased from 1.9% to 2.8%.
  • Over the same years, cigarette smoking rates among high school students fell from 12.7% to 7.6% while their rates of e-cigarette use increased from 4.5% to 11.7%. Among adolescents, the association between declining smoking rates and rising e-cigarette use was even stronger than among adults.
  • Statistical analysis of the changes in smoking rates and e-cigarette use by age, gender, race and ethnicity suggests that about 70 percent of the increased decline in cigarette smoking from 2013 to 2017 was associated with the rising use of e-cigarettes. The remaining 30 percent was associated with higher cigarette taxes, bans on cigarette sales by the CVS pharmacy chain, and increased use of anti-smoking prescription drugs.
  • Statistical analysis also strongly suggests that e-cigarettes are not a gateway to smoking cigarettes.
  • Rather, statistical analysis and numerous studies establish that e-cigarettes are an effective tool to help people stop smoking or avoid starting to smoke cigarettes.

Based on these analyses, we estimate that pre-existing trends and factors other than e-cigarettes can explain a decline in smoking rates by people ages 18 to 44 from 20.2% in 2014 to 17.9% in 2017. However, the rate fell from 20.2% to 14.6% in 2017, and the rising use of e-cigarettes can explain the additional 3.3 percentage-point decline in cigarette smoking rates.

  • By this account, e-cigarette use is closely linked to a reduction in cigarette smoking from 2014 to 2017 by 922,301 people ages 18 to 24 and 2,922,540 people users ages 25 to 44, or a total of 3,844,840 people.

We also calculated the healthcare savings and costs and the productivity benefits associated with the reductions in cigarette smoking and the increased use of e-cigarettes from 2014 to 2017 by those 3,844,840 people ages 18 to 44. These calculations are based on healthcare costs, life expectancy, and the differences in the incidence of illnesses that interfere with work for smokers, ex-smokers, nonsmokers and e-cigarette users.

  • E-cigarette use lowers people’s annual per capita healthcare costs, compared to cigarette smokers and ex-smokers, for all age groups up to age 75.
    • For people ages 25 to 44, the annual per capita healthcare costs of cigarette smokers are 9.8 percent greater than those of e-cigarette users, and the average annual per capita healthcare costs for ex-smokers are 19.8 percent greater than for e-cigarette users.
    • For people ages 45 to 64, annual per capita healthcare spending for cigarette smokers is 8.8 percent greater than for e-cigarette users, and average per capita healthcare costs for ex-smokers are 34.4 percent greater than for e-cigarette users.
    • Treating cigarette-smoking-related diseases accounts for an estimated 8.7 percent of annual healthcare spending, or $303.8 billion in 2017.
  • By reducing the number of people who smoke cigarettes, e-cigarette use also extends the lifespans of millions of people, raising their lifetime medical costs across all age groups except those 18 to 24.
    • We calculate that the use of e-cigarettes by the 922,301 people ages 18 to 24 in 2017, who otherwise would have started smoking cigarettes, should reduce their lifetime healthcare costs by $11.3 billion.
    • However, the use of e-cigarettes by the 2,922,540 people ages 25 to 44 in 2017,
      who otherwise would have started smoking cigarettes, increases their lifetime healthcare costs by $284.5 billion.
  • Those higher lifetime healthcare costs reflect spending for 330,489 people whom we would expect to have died before their mid-to-late 60s if they started smoking cigarettes in 2014- 2017, and for 500,865 people whom we would expect to have died before their mid-to-late 80s if they had started smoking instead of using e-cigarettes.
  • E-cigarette users (and nonsmokers) also are more productive than smokers, because smokers miss more work due to illness, come to work still impaired by illness more often, and take smoking breaks. We found that e-cigarette users are on average $820 more productive per-year than ex-cigarette smokers and $2,371 more productive per-year than current smokers, and that ex-smokers who shifted to e-cigarettes are on average $1,554 more productive per-year than current smokers.
    • The additional productivity of the share of the 922,301 e-cigarette users ages 18 to 24 in 2017 who worked from 2017 on, and who otherwise would have become smokers in 2014-2017, would be worth $14.7 billion over the 10 years from 2017 to 2027;
    • The additional productivity of the share of the 2,922,540 e-cigarette users ages 25 to 44 in 2017 who worked from 2017 on, and who otherwise would have continued to smoke in 2014-2017, would be worth $29.2 billion over the years from 2017 to 2027.

 

I. INTRODUCTION AND MAJOR FINDINGS

In 1964, U.S. Surgeon General Luther Terry issued the landmark report on the health dangers of cigarette smoking. Drawing on more than 7,000 studies, the report found that cigarette smoking was a cause of lung cancer among men, a likely cause of lung cancer among women, and the leading cause of chronic bronchitis for both men and women (2).

The following year, Congress passed the “Federal Labeling and Advertising Act of 1965” directing cigarette manufacturers to post health warning labels on all cigarette packaging. Since then, the federal government, American Cancer Society, the American Heart Association, the American Lung Association and other organizations have conducted continuing, large scale public education campaigns encouraging Americans to quit smoking or resist taking up the habit.

These efforts have been very successful. The share of American adults using tobacco products fell steadily from 42.4 percent in 1965 and 30.1 percent in 1985 to 20.9 percent in 2005 (3). This progress slowed from 2005 to 2011, when 18.0 percent of adults still smoked, and then accelerated again from 2013 to 2017, at by which time the share of American adults still smoking cigarettes had fallen to 14.0 percent. In fact, all forms of smoking fell markedly from 2011 to 2017 with one exception: From 2011 to 2017, while cigarette smokers fell from 19.0 percent of adults to 14.0 percent, the use of electronic or e-cigarettes more than doubled from 1.3 percent to 2.8 percent. Larger declines in cigarette smoking and greater increases in e-cigarette use occurred among young Americans. From 2011 to 2017, the share of high school students who smoked cigarettes dropped from 15.8 percent to 7.6 percent, while their use of e-cigarettes jumped from 1.5 percent to 11.7 percent.

These rapid increases in e-cigarette use have stimulated heated public debate over whether these developments should be welcomed or condemned. Since wide use of e-cigarettes is a recent occurrence, we cannot know yet whether long-term e-cigarette use carries any of the adverse health effects of cigarette smoking. Researchers have established that the vapors inhaled from e-cigarettes do not contain many of the carcinogens produced from burning tobacco and inhaling its smoke. Skeptics of e-cigarettes note that those vapors contain nicotine, which scientists have long established is addictive but not carcinogenic (4). Since nicotine addiction is a serious hurdle for most people trying to quit smoking, some public health advocates view the nicotine in e-cigarette vapors as a positive tool to help people quit smoking. In this view, e-cigarettes offer a much less harmful addiction than regular cigarettes for people already addicted to nicotine. In response, some skeptics claim that e-cigarette use, especially by young people, may be a gateway to smoking regular cigarettes.

This report analyzes the data on cigarette smoking and e-cigarette use to answer these and other questions. We analyze the recent sharp decline in cigarette smoking rates that occurred while e-cigarette use sharply increased, across virtually all groups. From 2013 to 2017, cigarette smoking fell sharply and e-cigarette use rose sharply among men, women, whites, blacks, Hispanics, middle-school students, high school students, young adults ages 18 to 24, and older adults ages 25 to 44 and ages 45 to 64. In every group, the rates at which e-cigarette use rose and cigarette smoking declined accelerated substantially from 2013 to 2017, compared to the preceding five years. The only exception were people ages 65 and over, among whom smoking rates and e-cigarette use were stable. For all other groups, statistical analysis shows that increased e-cigarette use explains most of the unusually sharp decline in cigarette smoking in 2013 to 2017. This finding is also supported by regression analysis, which shows that among white, black and Hispanics adolescents, every one percent decline in their cigarette smoking was accompanied by a 0.87 percent increase in their e-cigarette use.

We also use statistical analysis to test the proposition that e-cigarettes are a “gateway drug” to smoking regular cigarettes, especially for middle school and high school students. Fundamentally, the gateway proposition appears inconsistent with basic data on smoking rates: The young adults ages 18 to 24 whose use of cigarettes declined sharply from 2013 to 2017 included millions of people who began using e-cigarettes as adolescents in the preceding years. If e-cigarettes were a gateway to cigarette smoking, their large increases in e-cigarette use as adolescents should have been followed by rising cigarette smoking rates as they aged into the 18 to 24-year-old group. These data and our analysis of other data on adolescents appear to refute the gateway proposition, a conclusion also consistent with findings by other researchers.

We also reviewed the literature and data to evaluate how effective e-cigarettes are in helping people stop smoking cigarettes. We identified three meta-reviews in leading peer-reviewed journals that analyze scores of studies on how e-cigarette use affects cigarette smoking rates. One of these reviews found that cigarette smokers were 28 percent more likely to stop smoking if they used e-cigarettes, and another found that e-cigarette users were 2.3 times more likely to stop smoking than those trying to stop using no aid. The third meta-analysis reported that people using e-cigarettes containing nicotine were more than twice as likely to stop smoking as people using placebo e-cigarettes without nicotine. Lastly, a new study found that the short-term success rate of people trying to stop smoking using e-cigarettes was twice as high as those using nicotine patches, gum or lozenges.

To better isolate the impact of e-cigarette use on smoking rates, we also evaluate how other factors affect those rates, including rising cigarette taxes, smoke-free air laws, bans on cigarette sales in pharmacies, anti-smoking public education campaigns, restrictions of marketing for cigarettes, and the use of pharmaceuticals to help people stop smoking. The issue here is not whether these factors affect cigarette smoking – they do. The question is which factors can help explain why the decline in cigarette smoking rates accelerated abruptly from 2014 to 2017. To meet that criterion, we should see some increase or intensification in these factors over those years, as clearly occurred with the use of e-cigarettes.

Our review found that smoke-free air laws, anti-smoking public education campaigns, and marketing restrictions all operated from 2014 to 2017 as they did over the preceding five years. They likely helped maintain the declining trend in cigarette smoking, but they cannot explain why that declining trend accelerated. However, cigarette taxes increased, the CVS pharmacy chain banned cigarette sales in its stores, and the use of anti-smoking drugs such as Zyban and Chantix increased. Our statistical analysis found that rising taxes and the CVS sales ban contributed to about 15 percent of the additional decline in cigarette smoking rates from 2014 to 2017, and the increased use of anti-smoking drugs – Zyban, Chantix and their generics – could explain another 10 percent of the additional decline in cigarette smoking.

With 75 percent of the additional decline in cigarette smoking rates unexplained by factors other than the increased use of e-cigarettes, we rely on the estimate by a leading medical researcher in this area that the sudden increase in e-cigarette use can explain 60 percent to 80 percent of the additional decline in smoking rates from 2014 to 2017. We use the midpoint of that estimate and posit that up to 70 percent of the additional decline can be associated with the remaining major anti-smoking factor, the sharp increase in e-cigarette use over the same years. On this basis, we created a model to estimate more precisely how much the increased use of e-cigarettes reduced cigarette smoking from 2014 to 2017 among Americans ages 18 to 24 and ages 25 to 44. We projected how much cigarette smoking would have declined if the trend from 2010 to 2014 had simply continued. Next, we adjusted those results for the impact of the higher cigarette taxes, the CVS ban on selling cigarettes, and the increased use of anti-smoking drugs. Based on our previous analyses, we can attribute the difference between that adjusted rate and actual cigarette smoking rates in 2017 to the increased use of e-cigarettes.

From 2014 to 2017, the cigarette smoking rate of the two age groups (18 to 24 and 25 to 44) fell from 20.2 percent to 14.6 percent. The rate of decline from 2010 to 2014 and the impact of the three factors noted above can explain a decline from 20.2 percent to 17.9 percent. A reasonable explanation consistent with the data is that the remaining 3.3 percentage-points decline in cigarette smoking from 2014 to 2017 was largely or entirely the result of increased use of e-cigarettes. By this account, we estimate that the sharp increase in e-cigarette use from 2014 to 2017 was closely linked to the success of 3,844,840 Americans ages 18 to 24 and ages 25 to 44 who from 2014 to 2017 otherwise would have taken up smoking or who quit smoking.

We also examine the impact of e-cigarettes on healthcare costs and the economy. The impact on healthcare costs is mixed. At every age up to 75, e-cigarette users spend substantially less per person for healthcare than cigarette smokers or ex-smokers. For example, at ages 25 to 44, the annual per capita healthcare costs of cigarette smokers are 9.8 percent higher than those of e-cigarette users, and average healthcare spending by ex-smokers is 19.8 percent greater than e-cigarette users. E-cigarette use also reduces the numbers of people who smoke cigarettes, whose lifetime medical costs are lower because they die younger, and so extends the lifespans of millions of people, raising their lifetime medical costs. Since e-cigarettes help smokers quit, they also raise healthcare spending because those costs are higher among ex-smokers than smokers.

To analyze healthcare costs, we use life expectancy data for smokers, ex-smokers and nonsmokers and Congressional Budget Office (CBO) estimates of per-person healthcare spending for smokers, ex-smokers and nonsmokers, adjusting the results for nonsmokers to reflect e-cigarette users. We found that use of e-cigarettes instead of regular cigarettes by the additional 3,844,480 people from 2014 to 2017 reduced the lifetime healthcare costs of those ages 18 to 24 in 2017 by $11.3 billion while increasing the lifetime healthcare costs of those ages 25 to 44 by $284.5 billion. Those increased costs reflect the healthcare required for 330,489 people who would be expected to have died by their mid-to-late sixties if they had started smoking cigarettes in 2017 instead of using e-cigarettes, and 500,865 people likely to have died by their mid-to-late 80s if they had begun smoking instead of using e-cigarettes. Using a conservative estimate for the value of an additional year of life, the life extension associated with the use of e-cigarettes instead of cigarette smoking by our two age groups can be valued at $2.8 trillion or more than 10 times the additional healthcare costs.

Finally, we estimate the impact of smoking compared to e-cigarettes on people’s productivity over a 10-year period, based on our two groups’ rates of illnesses and time lost to cigarette breaks. Researchers report that e-cigarette users are $820 more productive per-year than ex-cigarette smokers and $2,371 more productive per-year than current cigarette smokers. We found that over a 10-year period, the additional productivity of the 922,301 e-cigarette users ages 18 to 24 in 2017, relative to their productivity if they had started smoking, came to $12.7 billion. Similarly, the 10-year productivity benefits of using e-cigarettes instead of smoking for the 2,922,540 people ages 25 to 44 who made that choice in 2017 were worth $25.2 billion.

This study establishes that the increased use of e-cigarettes is closely associated with declining rates of cigarette smoking, that e-cigarettes almost certainly are not a gateway to cigarette smoking, and e-cigarettes are highly effective in helping people stop smoking. We also found that using e-cigarettes instead of smoking often results in higher lifetime healthcare costs because people live longer, but the value of the extended lifespans far exceeds the additional healthcare costs. We also find that e-cigarette use is associated with large productivity benefits compared to smoking. Regulation of e-cigarettes should take account of these findings.

 

II. USE OF CIGARETTES, E-CIGARETTES AND OTHER TOBACCO PRODUCTS, 2011 to 2018

Rates of cigarette smoking among Americans, defined by the CDC as smoking at least once over the previous 30 days, have declined for many years. Since the Surgeon General issued his landmark report on the health effects of smoking, the share of American adults who smoke cigarettes fell from 42 percent in 1965 to less than 20 percent in 2011 (5). Over the next three years, e-cigarettes were introduced and broadly adopted by the public. E-cigarettes are battery-powered devices that convert liquid nicotine into a vapor that its users inhale without any combustion. While the vapor contains nicotine, it does not contain many of the harmful chemicals in regular cigarettes linked to sharply increased risks of cancers, heart disease, and respiratory ailments.

The CDC has collected data on e-cigarettes since 2011, along with the data it has long collected on cigarette smoking and use of other combustible tobacco products such as cigars and hookahs. These data show that among adults, cigarette use continued to decline from 19 percent 2011 to 14 percent in 2017, and adult use of all combustible tobacco products fell from 19.2 percent in 2013 to 16.7 percent in 2017. (See Table 1, below). This pattern holds for males and females, although men use all forms of tobacco at much higher rates than women. This declining tobacco use also holds across races and Hispanic ethnicity for cigarettes. By contrast, adult use of e-cigarettes rose steadily from 1.3 percent in 2011 to 3.5 percent in 2015 and then dipped to 2.8 percent in 2017. Men use e-cigarettes at higher rates than women, and whites use them at higher rates than blacks, Hispanics, or Asians. The data also show that the increase in adult e-cigarette use has consistently accompanied declining use of regular cigarettes: All told, regular cigarette use by adults fell 5.0 percentage points or more than 26 percent from 2011 to 2017, while electronic cigarette use by adults increased 1.5 percentage points or more than 115 percent.

The CDC also collects data on tobacco use among younger Americans, middle school students (approximately ages 11 to 13) and high school students (approximately ages 14 to 18), using separate categories for cigarettes, cigars, hookahs, e-cigarettes and all tobacco products. Among both groups of youths, the data show that from 2011 to 2018, rates of regular cigarette and cigar smoking fell sharply while rates of e-cigarette use rose sharply. This pattern holds for both men and women, and across whites, blacks, and Hispanics (7).