The Corner at UVA is a marker of change in Charlottesville. Even in the three years that most of us have been here we have gained and lost crucial members. Gone are the days of late night Sheetz, Little Johns (even Sammy’s briefly), College Inn and Armando’s. In their stead, we have a ridiculously understaffed Chipotle and a new Vape shop. The Vape shop is accompanied by a delta-9 store next to Grit and nicotine sales at Cohn’s, 7-day, and Corner Grocery. Personally, I would much rather have a small late night food stop than another store selling nicotine but it seems like the only businesses that can survive are ones selling alcohol or tobacco/nicotine products. I found a research paper online talking about the increased density and proximity of vape shops to college campuses. The study by Dai and Hao (2017) https://pubmed.ncbi.nlm.nih.gov/27302700/ found that there are more vape stores near college campuses. The conclusion of the study was pretty interesting. They suggested that since e-cigarettes pose a negative health risk to young adults that are not moderated by the private market that there should be some public regulation to limit its impact on young people. The argument is similar to the negative consumption externalities from smoking cigarettes. People smoke cigarettes, there is a bad odor (with potential health risks), and when they get sick they create a burden on the healthcare system and others. The risks of e-cigarettes are still being uncovered. While there seems to be little risk of harming others from secondhand smoke, there are some health risks posed to younger users. Their health problems could also pose a burden on healthcare that is felt by everyone else.
As a result of limited studies demonstrating the health risks of e-cigarettes, cities in the U.S. and other countries have implemented taxes like those on tobacco products. However, the strict association of tobacco with electric nicotine introduces another problem. E-cigarettes are commonly used by individuals in order to quit smoking tobacco, and as far as we can tell from current studies, are noticeably healthier (healthier is a relative term). Current regulations don’t take into account the differences between cigarettes and e-cigarettes, or the positive externalities from e-cigarette consumption, and instead they lump them into the same category with the same taxation. The result is a tax that overestimates the harm of consumption of e-cigarettes. An article published by Yale argues that e-cigarette tax increases will push young people to smoke cigarettes. https://news.yale.edu/2022/07/19/higher-taxes-e-cigs-likely-boost-cigarette-smoking-among-young-adults Much of the discussion around e-cigarettes emphasizes its potential dangers and ignores the results of overemphasizing this harm. Government regulation that attempts to correct for negative externalities is difficult enough, but how can they properly adjust for these two related markets? And how can they possibly implement well-informed regulation on e-cigarettes when there is so little information available about their real impacts? I found an interesting paper that goes through in more detail about the problems with the current attempts at corrective taxation with vape products and tobacco products if you’re interested. https://digitalcommons.pepperdine.edu/cgi/viewcontent.cgi?article=1077&context=sppworkingpapers
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Hi Hannah, thanks for your post. It's an interesting problem and, like you mentioned, a difficult one to know how or how not to regulate. I'd like to add another confounding variable to the mix when considering the role of government in offsetting the harm caused by externalities. Basically, should we consider future harm to the current smoker as an externality or just as part of that individual's demand curve? Assumedly, the current smoker/vaper recieves personal value from their habit because MU of vaping > cost + expected harms. But we know that humans are predictably bad at accurately evaluating risk, especially when the consequences are in the far future. (https://www.cogencyteam.com/news/2018/02/why-are-humans-bad-at-calculating-risk/#:~:text=People%20are%20less%20able%20to,risk%20in%20a%20certain%20population.) It stands to reason that our vaper will value the enjoyment she got from nicotine far less while battling lung cancer in her 60s. It could even be said that her younger self's vaping habit imposed a negative externality on her future self, because that future self's utility was not accurately captured by her cost-benefit analysis from 40 years prior.
If the object of regulation is to correct externalities and to maximize social marginal benefit, does it matter when in time that benefit is experienced? Should the government be equally responsible for future citizens as current ones? Economists would call this approach paternalism, but I haven't yet seen it framed in the language of externalities. Actually, here is an article that draws the two approaches as distinctly different: https://lawprofessors.typepad.com/law_econ/2014/04/confusion-regarding-paternalism-versus-negative-externalities-the-case-of-cigarette-bans.htmlhttps://lawprofessors.typepad.com/law_econ/2014/04/confusion-regarding-paternalism-versus-negative-externalities-the-case-of-cigarette-bans.html
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