Are electronic cigarettes a public good or health hazard?

An interesting case study by Prof John Quelch of HBS. And much like most things in economics there is dilemma here.

It is discussed in HBSWK series. E-cigarettes pose a dilemma to public policy people. On one hand (apologies to bring on this dreaded phrase), e-cigs bring benefits but on the other has negatives as well:

When electronic cigarettes first appeared a little over a decade ago, they were hailed by public health advocates-as well as some smokers-as a godsend: a tool to help smokers quit while mitigating the most harmful effects of tobacco. “The [e-cigarette] market is producing, at no cost to the taxpayer, an emerging triumph of public health,” one health advocate said.

Consisting of a small barrel-shaped design that mimics an actual cigarette, the devices vaporize a liquid nicotine solution, which is then inhaled without the tar and carcinogens found in smoke. Powered by a battery and controlled with a microchip, users can adjust the amount of nicotine they inhale, gradually weaning themselves off of their addiction if they choose.

“The value proposition of e-cigarettes is clear,” says John A. Quelch, Charles Edward Wilson Professor of Business Administration at Harvard Business School. “They provide the dubious pleasure of nicotine without all the cancer-inducing toxins associated with tobacco.”

Very quickly, however, enthusiasm faded, when some public health advocates began worrying that the cure was worse than the disease. The very fact users could control the amount of nicotine they ingested led to worry that e-cigarettes would cause smokers to take in more nicotine, rather than less. Even more worrisome, “eCigs” could provide a gateway for young people to start smoking tobacco cigarettes, or even lure ex-smokers back to the habit.

This has created a dilemma for health regulators, says Quelch. Do they regulate e-cigarettes in order to decrease the number of new smokers who may pick up the habit, or do they apply a light hand in order to increase the number of existing smokers who will quit.

Hmm…What do numbers suggest on usage of e-cigs:

In the case of electronic cigarettes, existing evidence indicates that they have led to a net decrease in smoking. Of the 43.8 million smokers in the United States in 2012, 3.5 million converted to eCigs; during the same period only 1.3 million eCig smokers converted to tobacco. That means a net decrease of cigarette smokers of 2.2 million, or 5 percent.

At the same time, 2.8 million nonsmokers converted to electronic smokes. But even that doesn’t tell the whole story, says Quelch, since it leaves out the number of smokers who would have taken up smoking tobacco if e-cigarettes didn’t exist, as well as the number of smokers who would have quit cold turkey without the availability of electronic products. “To really determine the public health impact of e-cigarettes requires a lot of sophisticated market research and analysis,” says Quelch.

 The case also shows how traditional tobacco companies are likely to take over the smaller e-cig players and then use their brand and retail power to spread them. This will not really lead to lower smoking etc.

The more things change, the more they remain the same..

 

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