Afternoon roundup

The closing of a few tabs. 

• Tim Harford's cautionary tale about the Sydney Opera House and how megaprojects bring heartbreak is a must-listen. One bottom line: if you're not real clear at the outset just what problem you're trying to solve, you're going to be causing problems. 
• My weekend column in the Stuff papers compares the current draft Government Policy Statement on Transport to the old 1998 proposed reforms - Better Transport Better Roads. The column also echoes a lot of what turned up in my submission on the draft GPS - which I don't think is yet on our website.
• Central Banking covers The Initiative's proposals around RBNZ: split prudential regulation off into its own separate institution, focus the monetary authority on inflation-alone, and not go ahead with deposit insurance. With comments from former RBNZ Chair Arthur Grimes and Mike Reddell. 
• Labour promises rebates for rooftop solar. Weird thing to promise when there's a lot of grid-scale solar going in without subsidies. The balance between grid-scale and rooftop shouldn't depend on subsidies to the latter. 
• Great piece in Quilette on the 2003 BMJ controversy over passive smoking and mortality. I remember having pointed at this literature when the Helen Clark Labour Government was banning smoking in pubs; I'd figured it should be for the venue owner to decide, especially where the risks from second-hand smoke really seemed nebulous. Not a popular view it turned out. The trendy 'let's get more government grants' people had banked their wins on second-hand smoke and were trying to argue that third-hand smoke (residue on surfaces, basically) was its own new terrible thing that needed a lot of grants. Ah well. 
• Kainga Ora is doing some really neat work in getting construction cost and build times down. The kind of thing that you'd normally expect the private sector to have led ages ago. But when councils allow very little building, who'd have the scale to front that fixed cost in process systems? Nobody would have invented automotive assembly lines if the global market for cars was a thousand a year...

Afternoon roundup

A closing of some of the browser tabs:

• Eli Dourado on NEPA - America's equivalent to the RMA. Superb seeming primer on how it all works, though I would not be one to notice any holes in it. 
• Road-building is going to get harder, thanks to a court interpretation around water consenting. Minor bits of drainage are going to hit large hurdles. 
• Chris Snowdon in conversation with Marewa Glover on New Zealand's tobacco and vaping regime. 
• Possibly the best approach for "glue ourselves to things" protestors: leave them there.
• Lindsay Mitchell picks up another aspect of the Perry child poverty report: substantial differences across regions in foodbank uptake, sorted by material deprivation. 
• "Rather than address the workforce crisis it inherited, Labour instead resorted to restructuring the health system to put it under greater central government control and make it more vertical. This was a fatal error." 
• NPR's Darian Woods and Wailin Wong on America's blocking Chinese access to higher-tech chips.
• Government may be preferring government-built housing in easing RM constraints. That, as a pattern, will make it harder to get necessary RM reform - if govt can exempt itself from the worst effects of bad RM rules...
• Older piece now, but I want to be able to find it again. Cato's critique of the US Jones Act, which prohibits foreign shippers from transporting goods between US ports. NZ shippers often want this kind of rule here too. It's been doing particular harm in Puerto Rico lately. 
• Sex work legalisation in NZ included measured aimed at protecting temporary migrants from exploitation; those rules may be doing more harm than good.
• Youth justice facilities overwhelmed by numbers.
• Emergency rooms overwhelmed by numbers and want of staff.
• Mental health system overwhelmed by numbers and want of staff.
• One reason the new Rings of Power series may not be as faithful to The Silmarillion's account as it could be: copyright. 
• Wellington: for, by, and of connected insiders. 
• MBIE is running a review of space policy. Wish there were a one-click submission option "Just leave it alone and don't break things." There are just so many submission processes on...
• Yet another area in which NZ could do well by simply recognising standards in use in other places. This time, car safety. 
• It looks like the prescription guidelines for medicines for ADHD have been designed around avoiding Ritalin flowing out into other uses rather than helping patients. And the one doctor who prescribed in accordance to patient needs rather than guidelines is in trouble for it. 

Tobacco end games

The latest round of proposed tobacco rules amount to prohibition. 

If not in two years, when low-nic rules come in that might be low enough to be de-facto prohibition, depending on where the Government sets the levels, then a few years later when the effects of a 1 January 2009 cut-off birth date for cigarette purchases works its way through. 

By the late 2030s, you'll have the absurdity of store clerks checking whether a purchaser is 28 or 29 - one will be allowed, and the other prohibited. 

And at that point there seem reasonable odds that the absurdity either has the whole regime thrown out (the better case), or full prohibition extended to all ages. 

If the low-nic rules do not amount to full prohibition, then the sinking lid on tobacco outlets will wind up mattering. The government proposes licensing tobacco retailers with a view to reducing the number of licensed outlets. 

If only very low nicotine cigarettes are allowed, then the sinking lid won't matter. Few people would want to buy very low nicotine cigarettes. But if the cap on nicotine content only prohibits the highest-strength cigarettes, then the right to sell cigarettes will be a valuable commodity. 

Basically the structure would provide local monopoly rents to local retailers, constrained by whatever mail order options remain allowed. If licenses transfer on sale of outlet, they'll capitalise into the price of licensed venues - like alcohol licenses in parts of Australia. If they expire on the sale or transfer of an outlet, they'll discourage some otherwise-efficient changes in ownership - similar to a stamp duty. 

None of it seems a particularly good idea as compared to giving more support for flips to vaping, legalising alternatives like snus, and sharpening the distinction between vaping and smoking in the regulations. Vaping is generally prohibited in places where smoking is prohibited; it should be allowed in more places where smoking is not. 

The current set of proposals risks strengthening the already growing illicit market, at a bad time. If people flip now from high-tax real cigarettes to illicit cheap real cigarettes, to avoid very low nicotine cigarettes, it will be less likely that they flip from there over to vaping. Illicit cigarettes don't carry over a thousand dollars in excise per kilo. 

I still like one additional option for reform. 

It's currently illegal to smoke in places like bars and restaurants - and to vape there. I think, in both cases, it should be up to the owner's discretion. But government isn't keen on that.

It's currently legal, but expensive, to provide ventilation and air filtration in bars and restaurants to reduce Covid risk. Few venues compete on that margin: Wellington's Hashigo Zake is one. Government is reluctant to regulate for better air quality, presumably because they do not want to be seen to be loading regulatory costs onto hospitality outlets - many of which will be on the verge of teetering anyway. A wave of bankruptcies following regulation would not be a great look, if that were the result.

But if a venue is able to clean the air to a standard that keeps Covid risks to trivial levels, the marginal cost of also cleaning smoke and vape plumes out of the air will not be high. If regulation allowed a venue the option of catering to smokers and vapers, if they met an air quality standard that also kept out Covid, that could be interesting right? Instead of loading a new cost onto businesses, it would be offering them an option they currently don't have. 

What argument could people have against that latter option? If the air is clean, the air is clean. The only risk is the risk of 'renormalisation', which seems a bit silly relative to the benefits of Covid-free indoor air. 

I canvas some of this in this week's column over in the Dom and the Stuff papers. 

I also had a great chat about it with the IEA's Chris Snowdon last week. 

Afternoon roundup

It's been a busy week of lockdown. On Monday, we released my report looking at cap-and-trade solutions for freshwater quality. Yesterday, Matt and I sent in our submission on the Commerce Commission's inquiry into supermarket competition. 

Don't think the computer's shut down this week. The browser tabs....

• It's a shame that rapid antigen tests are illegal in NZ. They aren't nearly as accurate as PCR. But when people are waiting six days for a test result and, in some cases, trying to run at-home isolation from the rest of the family during that period, having rapid antigen testing as a complement would be really good. RNZ reported on nurses living with close contacts being told to turn up for work even where those contacts' results hadn't come in yet. We could have had rapid antigen tests rolled out for staff starting shifts in hospitals and care homes. MedSafe banned them in April 2020 and re-upped the ban in April 2021. 
• I love this. North Canterbury's MainPower is telling staff to "Take Two for the Team". If 90% of their workforce is fully vaccinated by 1 December, every vaccinated staffer gets an extra day of special leave. Vaccination isn't just for you, it's for the team. Perfect. 
• I had a bit of fun in our Insights newsletter comparing the stringency of SmokeFree rules with the stringency of rules for MIQ exercise facilities. I'm pretty sure the Crowne Plaza's exercise area would not have been approved as an outdoor smoking patio for the bar.
• Meridian is putting in battery storage. Presumably they'll use it during times of peaking demand when power prices are through the roof. And of course, screwing around with the electricity market with price caps would discourage these kinds of investments. 
• Scientific American makes the case for the combination of carbon prices and carbon dividends. The Climate Commission pretends this option doesn't exist. It's depressing. I suppose the advice from NZ for Americans looking at this option: make damned sure that they're actually going to distribute the money back as a dividend, because the political establishment very much prefers to turn that money into its own discretionary slush fund to target to their voters. New Zealand's Green Party understands the case for carbon dividends. But they'd rather give their own voters a subsidy for a Tesla. It's depressing. Standard logic-of-collective-action stuff: concentrated benefits to Tesla-buying people, distributed cost to everyone who doesn't get a carbon dividend. And it'll make it easier to claim that reg measures on carbon are needed because of political pressure on ETS if prices rise - the sign on which would reverse if we had a carbon dividend. 
• The Atlantic continues to be great on Covid coverage. Best case, stupid endemic Covid becomes more like colds and flus because everyone will have some protection through vaccination and our immune systems will be able to handle it. But the virus could mutate to evade vaccines and immunity from prior infections. 
• My Dom column on the freshwater management report.

Public health, risk communication, and vaping

The editorial in the January 2020 issue of Drug and Alcohol Review worries that poor communication around illness caused by vaping illicit THC-based products in the US has risks:

The US investigation is still ongoing and the health authorities investigating the outbreak have not definitively identified the exact chemical that has caused the lung damage, which may be a chemical formed from vitamin E acetate. However, over the past 6 months, the evidence has strengthened considerably that nicotine vaping products are not the cause of EVALI. This has been reflected in the updated official communications from both FDA and CDC which have strengthened their warnings to avoid THC vaping products, particularly those purchased from informal sources. However, accurate, timely and complete reporting of these developments by the media has sometimes been lacking. The potential consequences of this misreporting include public misunderstanding, mistrust and potentially cases that could have been avoided if the correct information was widely communicated.

They worry about the risk of people continuing to use illicit THC products when much of the the media coverage was around nicotine-based vaping as potential cause.

Misreporting of the US epidemic continued after the CDC concluded that the outbreak was attributable to vaping contaminated illicit cannabis products. In Australia, the ABC television show 7:30 aired a misleading story on vaping (5 November 2019) that heavily featured nicotine vaping in Australia after a lead on the US outbreak of lung injuries ²⁸. There was no mention that the CDC and FDA had linked the outbreak to the use of contaminated illicit THC products.

Nor did 7.30 mention the absence of cases in the UK, where nicotine vaping is widespread among smokers, but the vaping of cannabis oils is not. Dr Chris Zappala, from the Australian Medical Association claimed, ‘We've seen a significant increase in recent months of vaping‐related illnesses. Patients who, unfortunately, are becoming so unwell that they're ending up in intensive care and as I'm sure people are aware, there have been some deaths related to vaping’. Neither he nor the reporter clarified that no EVALI cases have occurred in Australia. By omitting the role of THC vaping products, 7.30 withheld critical information from the public on how to avoid these injuries.

Australian standards of press reporting include the principles of accuracy, balance, clarity and avoidance of harm ²⁹. These principles are important given that the media is frequently cited by the public as a source of health information and influence health behaviour, however they are often found lacking ³⁰-³². The failures of the Australian and international media to accurately convey the facts about this outbreak put public trust in the media, and the health authorities in these reports, at risk and may encourage the public to ignore future warnings in the midst of serious health emergencies. Many of the responses to the outbreak proposed in these stories, such as banning flavoured vaping products or preventing access to nicotine vaping products, do not address the cause of the outbreak identified by US authorities, namely, the vaping of illicit cannabis products cut with vitamin E acetate.

Things weren't better here, and I've been particularly disappointed in Radio New Zealand's coverage.

One fun one: on 12 November, the Science Media Centre rounded up commentary from local scientists about what was going on in the US and the results of more tests on lung tissue samples.

Their round-up included (my paraphrases):

• Auckland University's Prof Chris Bullen, who noted that it was 'widely known' that the mess was associated with contaminated black-market THC cartridges a month earlier;
• Dr Kelly Burrowes at the Auckland Bioengineering Institute at the University of Auckland, who noted that Vitamin E in THC cartridges could be the problem but that with more than 15,000 flavours out there in e-cigarettes, it is just too hard to tell what is to blame;
• Dr George Laking at End Smoking New Zealand who said that everyone had known for two months that the problem was Vitamin E acetate, that the CDC was too slow to catch up, and that the reports should not raise concern for NZ nicotine vapers;
• Dr Murray Laugesen, Adjunct at U Canterbury and long-time tobacco harm reduction advocate, who pointed to Vitamin E acetate and the need to get the regulatory framework around vaping set quickly;
• Prof Julian Crane, Otago Uni at Wellington, who pointed to Vitamin E acetate, noted that it was a possibility since the beginning of the problem, and that there's no worry for NZ nicotine vapers.

All up, 4/5 said that nicotine vaping has nothing to do with the US problem. 

Guess who RNZ picked to talk to about it? Go on. You don't even have to click the link, do you?

I just don't have a good model of why RNZ has been like this.

Radio NZ on vaping, again

The Washington Post notes the growing consensus around just what the heck is going on with 'vaping-related' illness and death. Like I'd said last week, dodgy additives in THC vapes look to be the issue. You don't have to be paying massive attention to this file to know this.

Oregon health officials said last week that a middle-aged adult who died of a severe respiratory illness in late July had used an electronic cigarette containing marijuana oil from a legal dispensary. It was the first death tied to a vaping product bought at a pot shop. Illinois and Indiana reported deaths in adults but officials have not provided information about their ages or what type of products were used.

State and federal health authorities are focusing on the role of contaminants or counterfeit substances as a likely cause of vaping-related lung illnesses — now up to at least 450 possible cases in 33 states.

Officials are narrowing the possible culprits to adulterants in vaping products purported to have THC.

The sudden onset of these mysterious illnesses and the patients’ severe and distinctive symptoms have led investigators to focus on contaminants, rather than standard vaping products that have been in wide use for many years.

One potential lead is the oil derived from vitamin E, known as vitamin E acetate. Investigators at the U.S. Food and Drug Administration found the oil in cannabis products in samples collected from patients who fell ill across the United States. That same chemical was also found in nearly all cannabis samples from patients who fell ill in New York in recent weeks, a state health department spokeswoman said.

On Monday, New York state officials said they are issuing subpoenas to three companies the department has identified as selling “thickening agents” containing high levels of vitamin E that can be used in black market vaping products that contain THC. Dealers have been using thickening agents to dilute THC oil in street and illicit products, industry experts said.

I like that the Post uses the basic plausibility check. If this really were about nicotine vaping, which has been around for a long time, why would there suddenly be a pile of hospitalisations? This is new over the past year. They might yet find cases that look certain to be nicotine-only, but it's a tough one to prove: they've certainly found dodgy stuff in the THC cartridges that sick folks have brought with them to hospital, but not everyone who has used a THC cartridge will want to admit to it.

The best advice remains to buy your vaping product from a source you can trust. And to follow Michael Siegel (Twitter) and Clive Bates to keep up with the state of play. I like Action on Smoking and Health NZ, but they haven't really been putting up updates on the US state of play.

Meanwhile, here's how Radio NZ has continued to play the story.

US President Donald Trump has announced that his administration will ban flavoured e-cigarettes, after a spate of vaping-related deaths.

Mr Trump told reporters vaping was a "new problem", especially for children.

US Health Secretary Alex Azar said the Food and Drug Administration (FDA) would finalise a plan to take all non-tobacco flavours off the market.

There have been six deaths across 33 states and 450 reported cases of lung illness tied to vaping.

Many of the 450 reported cases are young people, with an average age of 19.

Michigan this month became the first US state to ban flavoured e-cigarettes.

Joining Mr Trump at the White House on Wednesday, Mr Azar said it would take the FDA several weeks to distribute the new guidance on e-cigarettes.

Everything in the RNZ reporting makes it seem that the illness is around e-cigarettes rather than vaped dodgy THC.

I expect this is deliberate. It is lying through omission. So I've put in another complaint, this time around accuracy.

RNZ has been on a campaign against vaping for some time. RNZ demonised Marewa Glover's harm reduction efforts. They gave ample airtime to attacks on her. Their reporting on vaping is consistently conflating illness in the US due to dodgy and counterfeit THC product with the kind of vaping people in NZ are familiar with. And they are doing it when the regulatory framework is soon to be announced, helping to fuel a moral panic that will lead to worse regulatory outcomes.

I don't know why RNZ is like this. But RNZ is like this. I wish that I weren't compelled to pay, through my taxes, for their dishonest reporting.

Of Cinderella, vaping, and decent regulatory frameworks

Over in my Dominion Post column, I take a Peter Huber twist on vaping regulation. One of the things I love about my column over there is that they keep all the out-links. So when I note work by Huber, I can link it. 

Eighties glam-metal band Cinderella taught us we don't know what we've got until it's gone. But it can be harder to know what you could have had if you never had it at all.

We can thus be thankful the regulatory framework for vaping and reduced-harm tobacco alternatives is coming only after a lot of Kiwis have been able to stop smoking thanks to vaping. But those vapers will need to step up to ensure they do not lose what they now have.

Regulatory expert Peter Huber distinguishes between two types of regulatory agencies. Some are charged with regulating existing risks. Others act more as gatekeepers, assessing whether new and potentially risky products should be allowed to enter the market at all. Onerous regulations mean few can benefit from, or be harmed by, the regulated product. Appropriate regulation strikes a balance between benefits and costs.

Huber says agencies regulating existing risks do a better balancing act because established consumers of regulated products push back against excessive regulation.

But "gatekeeper" agencies can easily be too precautionary. Regulate too heavily against a new pharmaceutical product, and most prospective beneficiaries will never know what they have missed. Regulate too lightly, and there will be front-page headlines if anything goes wrong, and the officials who signed the approval may find themselves in trouble with the press, the public, and the minister.
...
So vaping went from banned to legal rather quickly – and without a clear regulatory framework.

After the ruling, vaping community pressure for the speedy establishment of a regulatory framework was risky. A regulatory framework established before the vaping community more fully established itself could too easily be too strict.

I am made to understand that I also should have linked Cinderella, as Kiwis were spared that bit of 80s music. Some argued I should have linked Joni Mitchell instead, but I just can't stand Big Yellow Taxi. Yech.

Taxing tobacco in a world of vaping

If you're in Auckland, come catch me in a LEANZ panel discussion on tobacco tax, along with Marewa Glover and Peter Wilson. 

Here's the blurb; register at the link above.

Tobacco taxes are both an important source of revenue and an attempt to deter behaviour that can lead to social costs (e.g. healthcare costs from both active and passive smoking). Even in a world with just traditional tobacco products such taxes may not be as effective as their advocates would wish, leading to higher-quality products (e.g. filtered cigarettes) being substituted with lower-quality ones (e.g. unfiltered roll-you-owns). They can also be regressive, harming vulnerable communities like Māori, and in a “well-being” world, how do we balance pleasure and harm?

Like many other sectors, the tobacco industry is under “disruption”, with the advent of a range of alternatives to conventional tobacco products, such as vaping. Should these alternatives be taxed the same or less as conventional products, or possibly even encouraged? Will they result in less harms (and pleasure) then conventional products, or introduce whole new segments to the pleasures (and harms) of “smoking lite”?

LEANZ is delighted to bring together a panel of prominent experts to traverse these questions, from medical, economic and fiscal perspectives.

Panel Details

Professor Marewa Glover is a New Zealand public health academic specialising in smoking cessation. Her research includes comparisons of electronic and traditional nicotine delivery, as well as of different types of conventional tobacco products. She has also researched the impacts of smoking cession programmes and tobacco taxes on Māori. Professor Glover was a Finalist in the 2019 New Zealander of the Year Awards.

Dr Eric Crampton is the Chief Economist at The New Zealand Initiative, and has published on the challenges of regulation in a world of disruption. He served as Lecturer and Senior Lecturer in Economics at the Department of Economics & Finance at the University of Canterbury from November 2003 until July 2014. He is also the creator and author of the well-known blog “Offsetting Behaviour”, in which he has discussed the pros and cons of tobacco taxation.

Peter Wilson is Principal Economist and Head of Auckland Business at NZIER, which he joined in 2015. He has over 30 years’ experience in the public and private sectors, including time as a senior policy manager and economic adviser on tax policy at the Treasury. His professional interests range over regulatory economics, local government and planning to climate change and social policy.

SST on vaping

This weekend's Sunday Star-Times had a look at vaping.

While overall it's pretty favorable to that folks should be able to switch from smoking to vaping, there's still an overlay of unease about the companies that might be providing vaping kit. Regulatory uncertainty here has kept larger companies out, like the larger tobacco companies' vaping products; smaller NZ and international players have supplied vapers here instead.

With Big Tobacco-owned brands dominant in many markets, former smokers increasingly buy vapes from the same companies that sell the cigarettes they have given up.

Although Big Tobacco describes this pivot as about providing healthier options for smokers, others are cynical.

"What is the evidence that the tobacco industry is moving to a non-tobacco business model?" asks George Thomson, an Associate Professor at University of Otago's Department of Public Health.

Some tobacco companies are pushing hard on vaping, others haven't moved as far into that space. But I don't much get why any of that would be relevant to an appropriate regulatory framework here for vaping. Requiring plain-packaging warnings designed for smoking on reduced harm products doesn't make sense, regardless of whether the product was made by a tobacco company or someone else.

"The lesson that both New Zealand and the world has learnt is that you have to keep the tobacco industry out of the policy process," says Thomson.

"I think that equally applies to the vaping industry. Their business is to sell an addictive product to people and to make money from it."

It would be bad to let large incumbents set the rules in any industry - it would be hard to avoid bias against smaller competitors. But it's silly not to listen to those who have to run their businesses under those regulations.

"The worst thing New Zealand can do is introduce an overly restrictive regulatory framework," says [The New Zealand Initiative's Jenesa] Jeram.

"That's the kind of framework that favours the big companies that can afford to put in large applications and to meet all of the regulatory hurdles, and would come at the expense of the smaller players."

In contrast, Thomson — a self-acknowledged hard-liner on vaping — favours stringent regulation as a step toward New Zealand eventually becoming nicotine free.

It's good that Thomson's made clear that his goal is a nicotine-free New Zealand rather than just reducing the harms from smoking. Regulation intended to stamp out all use of nicotine will differ from that intended to reduce harms. If you want to minimise use, then setting up costly regulations to create a quasi-cartel among the largest companies will reduce consumption.

Jenesa's report on vaping is here.

Afternoon roundup

This afternoon's worthies:

• Things that make me wish genetic data were in New Zealand's Integrated Data Infrastructure: polygenic scores predict 11 percent of the variance in educational attainment. (full paper here). 
• Matt Nolan's back at TVHE, defending GDP against the fashionable types. 
• There's reasonable support in New Zealand for some cannabis legalisation, but people are still way conservative about allowing marijuana sales in stores - only the Greens are sensible on that one. Me on that stuff from earlier this year; NZIER from before that. 
• The Productivity Commission's terms of reference for its review of local government look good, but note that Labour has excluded discussion of capital recycling through privatisation of some existing Council assets. One excellent way of generating the capital for a new project is selling off an old one. Prod Comm's not allowed to say that. 
• Do you want pirates?
• Epistocracy now!
• Dick Puddlecote on vaping developments in NZ. And note that the Smokefree Coalition's now suggesting a pause on tobacco excise increases. I'd say we should be rolling back the last ones, but great to see more support for a pause. 
• I'm very glad that New Zealand sporting events aren't military recruitment drives. Meanwhile, in America...
• Caving in to internet bullies sets bad precedents.

Tobacco harm reduction

It's great that the Ministry of Health's latest Health and Independence Report points to the benefits of vaping. But there's still work to do here. 

The report notes that smoking is most prevalent in poorer communities and that while smoking rates have been declining, there's no way that current trends get the government to its preferred <5% smoking rates by 2025. And the report points to how e-cigarettes might help:

E-cigarettes: an option to help smokers to quit

Although the best thing smokers can do for their health is to quit smoking completely, the Ministry of Health considers that e-cigarettes have the potential to contribute to the Smokefree 2025 goal and could disrupt the significant inequities that are present. How much e-cigarettes can help improve public health depends on the extent to which they are a route out of smoking for New Zealand’s 529,000 daily smokers, without providing a route into smoking for youth and non-smokers.

Expert opinion is that e-cigarettes are significantly less harmful than smoking tobacco but not completely harmless. A range of toxicants have been found in e-cigarette vapour, including some cancer-causing agents. In general, levels of these toxicants are much lower than they are in tobacco smoke or are unlikely to cause harm. Smokers switching to e-cigarettes are highly likely to reduce their health risks and that of those around them.

Where smokers want to use e-cigarettes to quit smoking, the Ministry of Health encourages them to seek the support of local stop-smoking services. Local stop-smoking services provide smokers with the best chance of quitting successfully and should support smokers who want to quit with the help of e-cigarettes (Ministry of Health 2017f).

But there are still problems in getting there:

1. There remain interesting conflict of laws problems around plain packaging rules and the Fair Trading Act. Plain packaging rules for tobacco products would include heated tobacco, including Iqos. And, in theory, would also cover any nicotine derived from tobacco for vaping too. But putting the big smoking warnings on packages of products that are not smoked could be considered illegal under the Fair Trading Act's prohibitions around false representations and misleading conduct.
   
   I emailed MBIE asking about this, and they punted to ComCom. When I asked ComCom, they said that they cannot vet specific advertising or business practices for any company - and that companies would have to seek independent legal advice. So it is legal to sell vaping products - but if MoH believes the nicotine to be tobacco derived, it might consider it to be subject to the plain packaging rules. And it might be illegal to put those plain packaging warnings on the packages. But the government will not tell you. Seems pretty dumb. And it's an odd kind of dumb - companies that are cagey about how their nicotine is derived are probably ok, but ones that publicly state that their nicotine is derived from tobacco may not be. 


2. MoH is of the view that the Iqos decision does not apply to snus. Snus has seemed rather important in getting people away from smoked tobacco in Sweden. Why they want this to still be illegal - I don't get it. I expect that if they ever sued NZ Snus for selling the stuff, that the prohibition could easily be deemed inconsistent with the purposes of the Act.


3. Excise rates on non-combusted tobacco for reduced harm devices remain unjustifiably high. This doesn't affect vaping, which is not subject to excise (phew!), but would be a problem for other products. And what about the display bans and bans on advertising less harmful alternatives? 

Meanwhile, Imperial Tobacco / KPMG's annual report on illicit tobacco is out. They figure illicit tobacco consumption in New Zealand is now around 200,000 kilograms, most of which is Australian or Chinese packaged cigarettes coming in here - with an estimated excise value of $180m. Their method in figuring this out is interesting - one of the ways they do it has folks out collecting empty packs from roadsides and garbage bins, then checking the proportion that were not labelled for NZ domestic sale. The whole report's an interesting read for those who are keen on the organisation of illicit markets.

Here's a picture of the potential gains from getting foreign-sourced cigarettes to the NZ market.

I hope the government does not set a new path of excise hikes and rather focuses its attention on making sure the regs aren't in the way of selling less harmful alternatives. 

Northland DHB missed the memo

Earlier this month, the Ministry of Health clarified that sale of nicotine-containing e-liquids is legal. The Smoke-Free Environment Act's prohibition on the sale of tobacco products for oral use does not apply to heat-not-burn products, or to vaping products.

Northland DHB seems to have missed the memo. We'll come back to that. Because it looks like the memo has changed.

The Internet Archive does not have a record of the Ministry of Health's original version of the page. But I definitely remember that it said nothing about snus. The lack of clarification around snus has been a matter of some interest and discussion.

But the website now has this, which I'll screenshot:

The relevant bit: 

“In Philip Morris v Ministry of Health [2018] NZDC 4478 (the decision), the District Court found that all tobacco products (except types that are absorbed through the oral mucosa eg. snus and chewing tobacco) may be lawfully imported, sold and distributed under the Smoke-free Environments Act 1990 (SFEA).”

But that isn't what the District Court said. The District Court, at Paragraph 30, said this:

The Ejusdem Generis Rule[30] This rule provides that where particular words describing a genus of things are followed by general words, the general words will be confined to things of the same class as the particular words. Thus, where the words “any tobacco product labelled or otherwise described as suitable for chewing” are followed by “or for any other oral use”, the other oral use means a tobacco product used for chewing or an activity similar to chewing.

If the Ministry is now defining absorption through the oral mucosa as being an activity similar to chewing, that's up to them - and potentially contestable in court. But it isn't the Court's definition. The Court didn't even use the term mucosa anywhere in the decision. 

The Court also noted that the ban on sale of less harmful products like heat-not-burn was inconsistent with the purposes of the Act. Snus is far less harmful than smoked tobacco. Jenesa Jeram's report on tobacco harm reduction covers snus in section 4.1.

I wonder about a few things:

1. When the change to the Ministry's webpage was made;
2. Why the editing was not noted;
3. Whether the Ministry has taken any recent advice on the risks associated with snus use;
4. What that advice might have been;
5. Whether the Ministry views a ban on snus as being consistent with the aims of the Act, and the evidential basis for that view;
6. The basis on which the Ministry decided that "an activity similar to chewing" implied a ban on anything involving absorption through oral mucosa. 

But back to where we started. The sale of e-cigarettes is totally not banned. The Ministry's clarification does very clearly say that the sale of vaping kit is fine. And yet we see this today from @WellingtonVaper

With all the efforts now encouraged around utilising #vaping by @minhealthnz to necessitate THR, there appears to be a DHB that doesn't support this message?? are you aware of this @hapaitehauora? smokers want to move forward in transitioning from their addiction not backwards. pic.twitter.com/3TXW2kSrc1

— WellingtonVapers (@WellingtonVaper) May 28, 2018

I guess Northland DHB didn't get the memo. Some of the memo seems to have changed, but not that part. The restrictions on display and advertising would apply, though, if the DHB could show that the nicotine in the products were derived from tobacco rather than synthesised. That's silly and still in need of fixing in the rules, but it's my understanding of the rules as they now are.

Previously [and as update]: Regulatory Catch-22

Otago and disagreement

Every time I think that the University of Otago's Public Health people can't get any worse, they go and surprise me.

Today, the Initiative launched Jenesa Jeram's excellent report on vaping and reduced-harm alternatives to smoking. It walks through the evidence on the risks of vaping, heat-not-burn products, and snus, and makes some recommendations around liberalising access so that smokers might be able to choose ways of getting nicotine that don't involve breathing in smoke.

The report has drawn some reasonable support. Here's Action on Smoking and Health:

The report is well informed and accurate.
ASH has followed and will continue to follow the evidence in relation to all those alternatives.
Great article @JenesaJeram and @nzinitiative

— ASH New Zealand (@ASHNZ2025) May 11, 2018

And here's Massey University's Prof of Public Health, Marewa Glover:

Good update & overview on #vaping in NZ @JenesaJeram @nzinitiative Jenesa is right: if we honestly want to reduce smoking harm we should support use of Swedish #Snus also https://t.co/0E83Aj3Ufw

— Prof Marewa Glover (@MarewaGlover) May 11, 2018

The Science Media Centre ran a bit of an expert round-up. They asked Massey Health Sciences Senior Lecturer Dr Penelope Truman, who had a lot of sensible things to say:

“I welcome this policy input from the New Zealand Initiative.

“New Zealand has been at the forefront of tobacco control initiatives, with strong and largely successful policies in such matters as tobacco tax increases, restrictions on the places where people can smoke, restricting point of sale displays and, recently, introducing plain packaging.

“However, decreases in smoking rates in New Zealand have slowed, particularly for some groups (including Māori). Further, tax increases have reached the stage of encouraging illegal activity, such as the much-publicised dairy robberies. Smoking addiction is bearing especially heavily on those households with a low disposable income, and onlookers are increasingly questioning the ethics and efficacy of taking our ‘force them to quit’ approach to smoking cessation much further.

...

“The major worry, of course, is that vaping may become attractive to children and teenagers, become a gateway to nicotine addiction and, from there, encourage smoking. While it is obvious that youth are experimenting with vaping, I have never yet found anyone who can explain to me why, if e-cigarettes are a gateway to smoking, youth smoking is declining markedly everywhere that vaping is available.

“My reading of the data is that young people may experiment and may even take up vaping for a while (with or without nicotine) but that vaping diverts a significant proportion of those who might otherwise have taken up smoking from ever doing so. This may well be because nicotine by itself, in any form, is just not as addictive as smoking is.

“In the meantime, we have over 600,000 New Zealand smokers, who have not yet stopped smoking in spite of all the pressure to do so. The indications currently are that many might stop or reduce smoking if vaping were to become more readily available as a substitute, while very few non-smokers will take up vaping, beyond short-term experimentation.”

Lots of agreement on the importance of reduced-harm alternatives.

But Science Media Centre also asked Janet Hoek and Richard Edwards. Otago University. Here's their take on Jenesa's report.

“The dismissal of effective public health measures is perhaps unsurprising for a group funded in part by the three largest tobacco companies operating in New Zealand (British American Tobacco, Imperial Tobacco and Philip Morris). These are the companies already making or developing the ‘Heat not Burn’ products that the report promotes.

“We recommend that readers refer to an action plan developed following broad consultation with the New Zealand tobacco control sector. This sets out a multi-faceted strategy comprising an intensification of current approaches, including enhanced support for smokers wishing to quit; implementation of cutting-edge methods to reduce the affordability, availability, appeal and addictiveness of smoked tobacco products, and making nicotine-containing e-cigarettes and e-liquids widely available to smokers who wish to use them to help quit or as substitutes for smoking if they cannot or do not wish to quit.

“This comprehensive and evidence-based plan is far more likely to succeed than a limited approach that seems inspired more by the corporate interests of its backers than any real desire to achieve the Smokefree 2025 goal. It is difficult to view Ms Jerram’s report as anything other than ‘prugging’ – PR under the guise of research.”

So Action on Smoking and Health, Dr Truman and Prof Glover welcomed the report. Edwards and Hoek didn't like it - and that's fine. People can disagree. But what isn't fine is Edwards and Hoek's assertions around why our report isn't what they'd have written. They think our report reaches different conclusions than they've reached because the Initiative is a member-funded organisation and we have tobacco company members.

And yet ASH, and others in public health, agreed with the report - or at least found it well-informed and accurate. Are they somehow bought out by industry? I could understand people starting to question our intentions if there had been a bunch of errors or strange interpretations in it that all skewed one way, but it's Otago that's the outlier here - not us.

Our report recommends a regulatory framework that would keep the playing field open to new products and new producers. That hardly favours big players. A recommendation for very costly pre-market testing for every new product and every new flavouring would effectively lock the whole thing up such that only the largest companies could participate - and discourage people from switching away from traditional smoked tobacco. That is not what we recommended.

This is basic regulatory economics. Big companies are able to front the fixed costs of dealing with costly regulatory systems, and little guys aren't. That's why big companies sometimes welcome regulatory frameworks that sound like they'd be harmful to them - it hurts their competitors more. One of my favorite stories on that one was American washing machine manufacturers welcoming costly energy efficiency standards because, while it hurt them, it devastated the cheap imports then available. It hurt the competitors more. A lot of regulation is like that.

Otago simply seems unable to conceive of that people can disagree with them honestly - even though a good chunk of the New Zealand tobacco harm reduction academic community seems to disagree with them. Could it be possible that we disagree with Otago for reasons like those listed by Dr Truman?

And they couldn't even spell Jenesa's name correctly. It's Jenesa Jeram. Not Jerram.

I'm damned proud of Jenesa's report. And Otago's Public Health department is a disgrace to academia.

Interesting vaping times [updated]

I don't think anybody yet has a good handle on the consequences of yesterday's court decision on alternative nicotine delivery devices.

My reckons thus far, but with wide confidence intervals around them. I am not a lawyer. Do not rely on this as legal advice. I could be completely wrong. If you know about legal stuff, please tell me what I have gotten wrong. [and see one update at the end]

• I think the decision means that any nicotine delivery mechanism that is not like chewing is now not covered under the SmokeFree Environments Act;
• Any nicotine delivery mechanism that is like chewing may be covered, but the Court would entertain arguments that bans are contrary to the purposes of the Act if the mechanism is sufficiently less harmful than chewed tobacco - like snus;
• Retail sale of nicotine-containing e-liquids for vaping has been de facto legal because the government stopped enforcing the prior law, but de jure illegal. This has meant that a lot of specialist shops are selling the stuff and so have a few dairies, but that a lot of larger retailers that currently sell cigarettes have stayed out of the market. Why? Big companies fear reputational risk and liability for doing anything that isn't very clearly legal, and smaller players can be more nimble. Now you might think the decision opens this all up BUT:
• Nicotine-containing e-liquids weren't just restricted under SFAE where MoH thought they were covered as an "other oral use." Nicotine for inhalation is also a scheduled Pharmacy-only medicine. It's just that nobody's been enforcing that.
  
• I think that means:
• None of the restrictions under SFEA about where you can smoke apply to vaping. Property owners can choose to ban vaping if they want to, but they shouldn't feel constrained to ban it because of SFEA.
• Sale of nicotine-containing e-liquids may still be de jure banned except in pharmacies. Sale within pharmacies should now be completely legal because SFEA restrictions are gone and the only remaining ones come through scheduling in the Medicines Act. It's like any of the other pharmacy-only products that don't require prescription.
• Heat-not-burn is completely legal in the same way that toothpaste is legal.  
• If products like snus were deemed not covered by SFAE, they'd be completely legal in the same way that heat-not-burn products are completely legal - but sniffed tobacco would remain prescription-listed. 

I Am Not A Lawyer. But I haven't yet seen any proper lawyer-takes on this from folks familiar with this bit of law.

If MoH doesn't appeal the decision, everything gets interesting real fast. 

Heat not burn products will come quickly to market; vaping will remain in its current weird space unless MoH gets the regs up for vaping. 

Before the court decision, there were worries that adding heat-not-burn products to the regulator's remit would do too much to hinder speedy access to vaping products. 

That's flipped now if heat-not-burn is as regulated as toothpaste and vaping would formally be restricted to pharmacies (albeit more broadly available informally). Whether any of the larger suppliers would try selling through pharmacies in the interim is interesting. But we'd expect more pressure not just to get the vaping regs sorted out to avoid distorting things toward heat-not-burn, but also to get a similar structure around heat-not-burn. 

And I'd be a bit surprised if Otago didn't come out soon with some "The sky will fall if we don't move to ban these things or at least heavily restrict them" release.

Insert your favorite gif of an anxious person eating popcorn at the edge of the movie theater seat... this is all kinds of fun.

UPDATE: One correspondent who knows the area well but who is not a lawyer suggests that the Medicines Act only applies where the nicotine is for therapeutic or medicinal use. If that's the case, then supply of vaping e-liquids is legalised by the same court decision. 

Can they vape?

The District Court sided with Philip Morris.

Philip Morris started selling its heat-not-burn product in New Zealand last year. The Ministry of Health sued them for it, saying that it counted under the ban on oral tobacco products in the SmokeFree Environments Act. Philip Morris said that it shouldn't be counted as an oral tobacco product under SFEA, and the Court agreed.

I Am Not A Lawyer. And so I need a bit of advice in reading this ruling. It sounds to me like the official legal ban on vaping has disappeared too. If I recall correctly, the ban on selling vaping products depends on reading the nicotine in the e-liquids as a tobacco product (where derived from tobacco rather than synthesized), and on reading the inhalation of a vaped nicotine-containing e-liquid as being an oral use of tobacco under the SmokeFree Environments Act.

And here's what P J Butler wrote:

The Ejusdem Generis Rule
[30] This rule provides that where particular words describing a genus of things are followed by general words, the general words will be confined to things of the same class as the particular words. Thus, where the words "any tobacco product labelled or otherwise described as suitable for chewing" are followed by "or for any other oral use", the other oral use means a tobacco product used for chewing or an activity similar to chewing.

That sounds to me like ruling out vaping as counting as oral use as well. It is not similar to chewing.

Justice Butler continues:

The Purposes of the Act

[33] As detailed earlier they are as set out in s 3A and s 21. The evidence of Mr Rumsay was that no combustion occurs when 'Heets' is used under normal operating conditions, but "inhalable volatile compounds" are released. Dr Gilchrist's evidence was to the effect that it is the act of burning the tobacco that leads to the to the formation of the majority of harmful chemicals - (my emphasis). Dr Gilchrist quoted from a UK Royal College of Physicians report which contained the following passage:

The main culprit is smoke and, if nicotine could be delivered effectively and acceptably to smokers without smoke, most if not all of the harm of smoking could probably be avoided.

[34] Given this advice, it can be said that the use of 'Heets' while it may have associated risks in itself, is not as harmful or potentially harmful as ordinary cigarette use. This finding would fit squarely with the purposes stated in s 3A(1)(a) and 9(c) and s 21(b) of the Act. The defendant submits that "the outcome the Ministry is seeking with this prosecution is the opposite of what Parliament sought to achieve when passing the SFEA".

[35] I find that the 'Heets' product is not caught within the ambit of s 29(2) of the Act and the charge is dismissed accordingly.

I read this as meaning that all vaping and all heat-not-burn products are currently legal for sale and use in New Zealand. But I am not a lawyer. Am I reading this correctly?

Pharmacy smokes

Pharmacies in New Zealand aren't the most competitive. We have a bizarre rule requiring that majority ownership of any pharmacy must be held by a pharmacist. It's just dumb. We don't require that restaurants be owned by trained chefs; we don't require that bookstores be owned by licensed authors; we don't require that vegetable shops be owned by registered farmers with a Bachelors in Agricultural Sciences. 

But only a pharmacist can own a pharmacy because somehow training as a chemist is exactly what you need to be able to run a retail operation.

All that's to say that there can be rents available in pharmacy because of stupid entry restrictions.

So Otago went and surveyed 30 Wellington pharmacies asking them if they'd like a monopoly on cigarette sales. Otago University wants to ban cigarettes everywhere, and the path to doing that can involve making it a hassle to get cigarettes. So making them available only in pharmacies can be part of that.

Pharmacies have some local monopoly power given the entry barriers caused by the ownership restrictions. Their markups on cigarettes could consequently be a fair bit higher than that seen at the local dairy.

And despite that, pharmacist support for selling smokes wasn't all that high.

Pharmacies may consider selling tobacco to help achieve New Zealand's "bold measures" of being smokefree by 2025, a research survey finds.

The small-scale University of Otago survey asked 30 Wellington pharmacies in 2015 if they would consider filling the void of tobacco sales if they were phased out in supermarkets, convenience stores, petrol stations and tobacconists.

It was a very likely option for 20 per cent of participants, but the majority of pharmacists said they were somewhat likely (43 per cent) to sell tobacco if the strategy was proven to be effective elsewhere.

However, pharmacists were concerned the sales could decrease safety through tobacco-related crimes like robberies and staff abuse, increase foot-traffic and work-load, and potentially damage the "health professionals" image of New Zealand pharmacies.

I don't get how a survey of 30 pharmacies asking them whether they'd like to be the sole suppliers of cigarettes gets to be a peer-reviewed journal article.

But it is kinda interesting that places that hold all kinds of high-demand products - all the prescription narcotics - and already have security measures in place for those restricted drugs, are scared to stock tobacco because it would make them a target for robberies.

Informative advertising

New Zealand's in a fun legal limbo right now on e-cigarettes. Everybody knows that the Ministry of Health is soon to be liberalising, so the de jure restrictions that prevent selling of nicotine-containing e-liquids aren't being enforced. It's pretty easy to get vaping liquid.

In some ways, whatever regulatory regime comes out of this will be more restrictive than the current de facto status quo.

But if legalisation makes it easier for providers to advertise, that could be for the good.

Dhaval Dave and coauthors find that FDA restrictions on e-cigarette advertising in the United States prevented people from quitting smoking. From their abstract:

Only recently introduced into the U.S. market, e-cigarettes have been aggressively promoted, and use is increasing rapidly among both adults and youths. At the heart of the regulatory debate are fundamental questions regarding whether e-cigarettes will draw cigarette smokers away from a dangerous habit or lure new initiates into tobacco use. We provide some of the first causal evidence on whether e-cigarette advertising on television and in magazines (which comprise about 90% of total media spending on e-cigarettes) encourage adult smokers to quit. We find that the answer to this question is a tentative yes for TV advertising but no for magazine advertising. Our results indicate that a policy to ban TV advertising of e-cigarettes would have reduced the number of smokers who quit in the recent past by approximately 3%, resulting in roughly 105,000 fewer quitters in that period. On the other hand, if the FDA were not considering regulations and mandates that would likely eliminate many e-cigarette producers during our sample period, e-cigarette ads might have reached the number of nicotine replacement therapy TV ads during that period. That would have increased the number of smokers who quit by around 10%, resulting in an additional 350,000 quitters.

To paraphrase Dr Strangelove, building a much less harmful alternative to combustible cigarettes doesn't do you nearly as much good if you can't tell anybody about its existence.

Peltzman effects: smoking edition

When each cigarette gets more expensive, smokers compensate by drawing harder on each stick. This means that they wind up being exposed to more bad stuff per cigarette smoked: smoking down to the filter and pulling hard on it gives you more tar.

I'd seen this first in Adda and Cornaglia. But, like with any Peltzman effect, you have to check whether the worse outcome per instance outweighs the drop in instances. Drivers wearing seatbelts take more risks, but they are more likely to survive a crash. The ultimate effect is then ambiguous (though less ambiguous for pedestrians). It's an empirical question.

The latest AEJ: Policy has new evidence from Cotti, Nesson and Tefft. Their abstract:

We analyze the Nielsen Household Consumer Panel to estimate the effects of tobacco policies on tobacco-related purchases using within-household variation. We also match purchases to cigarette contents from NHANES. Higher cigarette taxes reduce cigarette purchases and increase smoking cessation product purchases, while estimates of smoking ban effects are less precisely estimated. Smokeless tobacco (SLT) taxes lead to reductions in SLT use but also lead to substitution among SLT products. We find evidence that cigarette taxes induce purchases of cigarettes with higher tar, nicotine, and carbon monoxide contents, but this compensatory behavior is overwhelmed by the reduction in cigarettes purchased.

So more harms per cigarette (small effect), but dwarfed by the reduction in cigarettes smoked.

Unfortunately, their "smoking cessation product purchases" category includes both standard nicotine gums and the like, and electronic cigarettes. It would have been very interesting to see how e-cigarette availability mediated the effects of tax hikes.

Selection gateways

Suppose you observed that kids who tried some risky-looking novel activity X were more likely to go on to try some other risky activity Y. Should you conclude that X leads to Y, or that kids who are risk-, sensation-, or novelty-seeking will exhibit that on more than one margin? Cohort selection effects matter: the ones who try X aren't a random sample from the population.

A few years ago, the Dunedin Longitudinal Survey found that early use of marijuana correlated with problems down the track; Ole Rogeberg argued, and further evidence later showed, that that was all selection effects. The kinds of kids who try marijuana early are not the same as other kids and would have different outcomes even if they didn't use marijuana.

Out this week in Pediatrics (supplementary materials here): a study showing that kids who use e-cigarettes are more likely to go on to try tobacco than kids who didn't use e-cigarettes as baseline.

Adjusting for gender, ethnicity, grade and highest parental education, those who'd used e-cigs at baseline were 6.2 times as likely to go on to try tobacco. I expect this will be painted as e-cigarettes being a gateway drug for tobacco. But kids who tried e-cigarettes at baseline will be different from other kids: even in the absence of any gateway effect, you would expect to find correlations between exhibiting novelty-seeking behaviour on one margin and exhibiting it later on another margin.

They note that controlling for number of friends who smoke, friends' attitudes toward smoking, and others in the household smoking had no appreciable effect on results, but that having tried cigars, pipes or hookah prior to initial evaluation reduced the odds ratio on e-cigarettes from 6.2 to 5.5. It would be interesting to see what would happen with other controls for baseline risk-seeking: age of initiation of sexual activity, any other alcohol or drug use, or even number of days' detention in the past year. It can be tough though to get additional controls through IRBs though. Some assessment of time preference could have been interesting too.

They do try to control for a measure of susceptibility to tobacco use. They asked the kids a series of questions like "At any time in the next year, do you think you will use these products?" or "If one of your best friends were to offer you these products would you use them?" A "definitely not" answer to 3 questions was taken to indicate that the person was not susceptible to smoking. Restricting the sample to those deemed susceptible reduced the odds ratio to 2.12.

Among those who'd answered "definitely not" to all three questions, those who used e-cigarettes at baseline were 9.7 times more likely to try cigarettes.

Again, you can tell two stories here.

You could say "Among those most emphatically saying that they wouldn't try cigarettes, those who tried e-cigarettes were at much greater risk of smoking".

Or, you could say "There's a strong social desirability bias around smoking; few people are willing to admit they might ever try cigarettes. 79 kids didn't completely rule out ever wanting to try cigarettes, and most of them used e-cigarettes at baseline. 216 kids gave emphatic no answers, and of those, far more of the e-cigarette users went on to try tobacco. If admitting you might try cigarettes is shameful, is it surprising that those kids who were more sensation-seeking to begin with, as demonstrated by using e-cigs at baseline, were more likely to smoke despite having said they never would?"

It would have been interesting to see whether a set of susceptibility questions around risky drinking would have revealed similar patterns between e-cigarette and non-users on follow-up.

Mike Siegel has a bit more to say on it here:

This study is virtually meaningless in terms of its evaluation of the “gateway” hypothesis.

Baseline e-cigarette use was defined as ever having taken even one puff of an e-cigarette. And smoking initiation was similarly defined as ever having taken even one puff of a cigarette. So the study did not document that even one subject in the study was evera regular vaper. It is entirely possible (and in fact likely) that the majority of these kids had experimented with e-cigarettes, failed to become vapers, and then turned to regular cigarettes. In fact, it’s entirely possible that had these kids been able to stick with vaping, they would never have become smokers.

In addition, the study counted anyone who had even puffed a cigarette as being a smoker. So theoretically, a subject could have had a single puff of an e-cigarette and hated it, and then had a single puff of a cigarette and hated it, and they would be considered someone who initiated smoking because of first becoming addicted to vaping.

However, they did find that e-cigarette users were 5.5 times as likely to have initiated smoking but not to have smoked in the past 30 days, and 7.5 times as likely to have reported cigarette use in the past 30-days. If regular smokers are more likely to report having smoked in the past 30 days, then it isn't just the single-puff problem driving things.

I'm more worried about underlying cohort heterogeneity that is far from adequately controlled by asking kids whether they think they might ever take up smoking.

Tobacco excise: running the numbers

Over at the Public Health Blog, Nick Wilson runs some numbers on the likely effects of the tobacco tax hikes.

Our BODE³ Programme Team have developed and published on a tobacco forecasting model (4,5). Running this model for the newly proposed programme of increasing tobacco tax by 10% each year until 2020 will see tobacco smoking prevalence reduce to 21.4% for Māori and to 8.9% for non-Māori by 2020 (compared to 22.7% and 9.3% if this taxation programme had not continued beyond January 2016 – see Figure 1). Assuming a continuation of ‘business-as-usual’ patterns in smoking uptake and cessation thereafter, the model suggests that prevalence will further reduce to 17.3% and 7.2% by 2025 for Māori and non-Māori respectively. Furthermore, the additional four rounds of tax increases have the potential to reduce the absolute ethnic gap in smoking prevalence observed in this country by nearly 1 percentage point in 2020 (ie, from 13.4% to 12.5%). In reality however, we suspect that annual tax increases are now so well accepted by NZ politicians and the public that this programme would actually be extended beyond 2020 when this year is reached.

I’m not going to dispute these figures at all; they line up with the ballpark figures I keep in my head on things – or at least through 2020. The price elasticity of demand for alcohol is about -0.4; the participation elasticity of smoking is about -0.2 or -0.25. The numbers here through 2020 are definitely in the ballpark I’d expect from a 40% increase in excise where excise starts at about 60% of the current price of a pack of smokes. The numbers through 2025 would be tougher to attribute to excise as more of the work there is being done by the continued decline in youth smoking uptake which would happen regardless of tax, and Wilson does not provide the counterfactual “what smoking in 2025 would be absent the tax” number (though the gap between the curves in 2020 isn’t much different from the gap between the curves in 2025).

But let’s think through what they mean.

By 2020, Wilson projects that excise will have cut smoking rates among Maori from the 22.7% he would have otherwise expected to 21.4%. So for every 1000 Maori in 2020, 13 who would otherwise have been smokers will not be smokers because of excise. That’s good for them, presuming that they wanted to quit and are happy that excise helped them to do so – which we’ll grant for now.

On the flipside, for every 1000 Maori, you have 214 smokers who will be paying a lot more for their cigarettes than they otherwise would have been paying.

The 2015 excise rate is $668.51 per 1000 cigarettes, or $13.37 per pack of 20 cigarettes. Suppose each smoker smokes a half a pack a day: 10 cigarettes. Each is then currently paying $2440 in tax per year. Does that number seem very high when smokers are heavily concentrated among the poorest? It should give you a bit of pause.

That tax is scheduled to increase now by 10% per year for four years: a 46.4% increase (assuming it compounds). The tax rate per thousand cigarettes would then be $978.70, and the annual excise on a half-pack-a-day habit would be $3572.25.

We should not expect that smokers would maintain current levels of consumption if prices increase. If we go with a standardish price elasticity of demand of -0.4,* and if the cheapest cigarettes currently are $18.80 for a pack of 20 Easy brand, and if we assume 100% excise pass through to get the biggest cuts in consumption possible (unrealistic), then the price of that pack of 20 will increase to $25. A 46.4% excise hike results in a 33% increase in the actual price of cigarettes (as about $5 of an $18.80 pack is the tobacco currently). Each smoker would then cut consumption by about 13%, so a 10 cigarette a day habit would drop to 8.7 cigarettes. Let’s round to 9 when we recognise that some people do smoke more expensive brands currently and will save money by shifting to a lower price point.

So for every 1000 Maori, we have:

• 773 who would not have smoked regardless,
• 13 who quit because of the tax and enjoy health benefits, save some money, and may or may not be happier from having quit – we’ll assume happier,
• 214 who keep smoking about 90% as much as they had been smoking. Each and each pay about $1020 more in excise per year than they otherwise would have paid.

For every Maori smoker who quits, 16.46 Maori smokers will pay a bit over a thousand dollars more in excise per year – assuming they start with a half-pack-a-day habit. Some will pay more, some less. The 2014/2015 NZ Health Survey says that Maori daily smokers smoke on average 10.3 cigarettes per day, so that’s about right. On the other side, the same survey says that current prevalence of daily smoking is 35.5% among Maori. If Wilson’s figures underestimate baseline smoking in 2020, then the tax hike would have a few more current smokers quitting than here estimated, and a lot more current smokers paying that extra thousand bucks per year.

The NZ Health Survey notes that daily smoking rates are 25.4% overall in the most deprived neighbourhood quintile (as compared to 8.3% in the least deprived quintile). MoH estimates there are 178,000 daily smokers in the most deprived quintile. If each of them is pays an extra $1000 in tax, the government is pulling $178 million more dollars out of our poorest communities.

Earlier this week, Jenesa went through the numbers starting instead from the Regulatory Impact Statement.

The government expects another $700 million out of this.

There are currently 546,000 daily smokers, or at least by the 2014/15 latest figures. Some will quit. The government expects to get $1282 per current daily smoker (or $1157 per smoker including intermittent smokers). Since some will quit, the burden per non-quitter, on these estimates, suggest my figures above understate the true figures – assuming Treasury’s done a more careful job of things than my spitballing out of Nick Wilson’s numbers.

We can pretty confidently state that smokers who continue, which will be the vast majority of smokers, will be paying over a thousand dollars more per year for their habit, and that these smokers are heavily disproportionately poor.

The quintile household income boundary for the bottom quintile in 2014 was $21,300.** If a bottom quintile household has one smoker in it, $1000 per year is 4.7% of that household’s annual income. That’s an overestimate of the effect in 2020, because incomes in the bottom quintile will have increased by then. If we extrapolate the average annual increase in that quintile’s real income since 2001 through to 2020 from 2014, income would be about $23,285, and the $1000 in excise increase would be 4.3% of that household’s annual income. But remember that this is just the increase in excise. The total burden of tobacco excise on a bottom quintile household’s income where that household has one smoker on a half-pack a day is about 13.8%.

Meanwhile, it remains illegal to sell nicotine-containing vaping cartridges in New Zealand. You might think that if health policy were about health, rather than about loading taxes onto marginalised and politically weak groups, we’d have had an announcement about legalising vaping rather than pulling $1000 more per year out of poor smokers.

The greatest*** trick the devil ever pulled was convincing people that tobacco excise is good for the poor because the health benefits are progressive. You can get those same progressive health benefits simply by legalising vaping, without the ridiculous regressive burden. Where even this massive tobacco excise hike only has trivial effects on quit rates relative to the counterfactual, and huge effects on household incomes for the poor, vaping doesn’t have to achieve all that high a penetration rate to be far far more effective than excise.

Another fun fact: where benefits tend to be CPI adjusted, they use CPI not inclusive of tobacco prices.

I wanted to run some of these numbers because I’m heading this afternoon into a pre-record for Radio New Zealand’s Sunday Morning programme. Along with me will be the excellent Marewa Glover, and Tony Blakely. Tune in on Sunday….

* A -0.5 figure is often used for consumption, but I’ve already accounted for participation elasticity, so I think I’m being conservative here.

**Real equivalised household income before housing cost, 2014, table D.2, Bryan Perry.

*** Ok, among the greatest.