Resurgence in Smoking, 21st Century Style: E-cigarettes

 No_smoking_sign

Another part of Israeli culture that really grinds my gears: the pushing and shoving at a bus stop. There is no line when getting on a bus, and as a result it is not uncommon to  be trampled when trying to get on the bus. Imagine the brawls that would erupt if this happened on New York City buses!

Another part of Israeli culture that really grinds my gears: the pushing and shoving at a bus stop. There is no line when getting on a bus, and as a result it is not uncommon to be trampled when trying to get on the bus. Imagine the brawls that would erupt if this happened on New York City buses!

 

In my last blog, I raved about my experience in Israel. Of course, no place is paradise. After a short while there, a major shortcoming in Israel’s society emerged. I am not referring to what you read about on a daily basis in the media regarding the Israeli-Palestinian conflict, but rather something else entirely: smoking. Wherever I went, I always saw someone puffing away at a cigarette. In fact, I detected patterns as to when this pastime was most popular. I witnessed the following three scenarios every single day:

The only thing missing here  that would encapsulate a Tel Aviv resident at a cafe for breakfast? The dog tied to the chair. And the newspaper, in order to have fodder for a political quarrel.

The only thing missing here that would encapsulate a Tel Aviv resident at a cafe for breakfast? The dog tied to the chair. And the newspaper, in order to have fodder for a political quarrel-much better than American apathy!

-At 9 am in a local café, individuals would hold a cup of coffee in one hand, and a newspaper in the other, with a cigarette nestled in between their index and middle finger
-At lunchtime, people would choose a cigarette as a “healthy” dessert alternative to ice cream
-At the end of a long day, people would unwind by sitting outdoors and quietly puffing away.

No matter where I went, I was subject to the unpleasant stench of their smoking, not to mention the fact that I was putting my health at risk. In economics, we refer to this as a negative externality: a consequence of an action that negatively affects a third party. Just to clarify: in this case, I was the third party, and the negative externality was my declining lung health.

In any marketplace, you will find hookahs sold in a variety of colors, sizes, and styles.

In any marketplace, you will find hookahs sold in a variety of colors, sizes, and styles.

In between coughs from the second hand smoke, I asked my peers and coworkers why smoking was so popular. They explained that while they realized the health risks, it was nonetheless ingrained their culture, and was even perceived as a social activity. Indeed, smoking was associated with leisure. Almost every bar I passed reeked of tobacco, and almost all offered hookahs. What I found to be the most disconcerting of all was that many youth, who were no older than 14, could be found smoking on the street with friends.

I was excited to see on the first day of school that this sign was erected. Little did I know that the truth belied the message.

I was excited to see on the first day of school that this sign was erected. Little did I know that the truth belied the message.

When I returned to America, I was excited at the prospect of being able to walk around and breathe in the fresh air. A positive trend in America in recent years has been a precipitous decline in cigarette smoking. Moreover, Queens College implemented a Tobacco-Free policy for the entire campus in 2012. Thus, while I enjoyed my time abroad, I looked forward to something I had previously taken for granted.

I was shocked to see that less than a week after observing an increase in smoking, the Wall Street Journal confirmed my suspicion. Smoking is indeed on the rise, at an alarminlgly fast rate. The Wall Street Journal attributes the spike to a drop in funding for anti-tobacco programs since 2007. I disagree.

I was shocked to see that less than a week after observing an increase in smoking, the Wall Street Journal confirmed my suspicion. Smoking is indeed on the rise, at an alarminlgly fast rate. The Wall Street Journal attributes the spike to a drop in funding for anti-tobacco programs since 2007. I disagree.

You can therefore imagine my horror, my shock, and my disdain on the first week of school, when I arrived on campus and saw people smoking. Granted, it was not comparable to the heavy smoking in Israel. And yet, the number of people puffing was substantially more than in previous years. In order to make sure that my coffee withdrawal was not causing me to suffer from hallucinations, I consulted with others to see if they too noticed this startling trend. Every person I asked agreed with me, saying that they had already noticed substantially more smoking this year. The Wall Street Journal reinforced this observation, noting in a September 2014 article that the adult smoking rate rose 16.1% in 2013.

Clean and pristine, this area also seems to be attracting students who surreptitiously sneak in a smoke.

Clean and pristine, this area also seems to be attracting students who surreptitiously sneak in a smoke.

Some areas in particular were especially populated with smokers, such as by the Ampitheater,  near the Student Union, and by the parking lot between the gym and library. All three areas are near the outskirts of campus, but are still officially on campus. While they are defying the school policy, I must recognize that they are being considerate by going to a more secluded area at off peak hours. What I cannot understand, though, is that they go to Queens College, a school lionized for giving “the biggest bang for your buck”, and yet they pay so much to sustain this expensive habit. In particular, New York cigarettes are the most expensive in the country.

Gone are the days when people smoke pipes. The 21st century innovation to the classic cigarette is the e-cigarette.

Gone are the days when people smoke pipes. The 21st century innovation to the classic cigarette is the e-cigarette.

Why is it that there is a sudden spike in what many deemed to be a dying trend? I think the answer to that lay in an innovation of the tobacco industry: e-cigarettes. What many of us had perceived to be smoking on campus with old-fashioned cigarettes might have been with the upgraded kind.

The new e-cigarettes to hit the market. Many are sold in cases or sets to charge them, since they are battery operated.

The new e-cigarettes to hit the market. Many are sold in cases or sets to charge them, since they are battery operated.

Based on what I grasp from the complicated descriptions and diagrams, e-cigarettes are different than cigarettes since the former uses vapor while the latter uses pure tobacco. Additionally, e-cigarettes, as the name somewhat connotes, is battery operated. Introduced in the United States market in 2007, e-cigarettes, along with their similar counterparts e-hookahs and vapes, have exploded in popularity. They are also much cheaper in the long run because they last for a long time. This surge in usage is mainly due to the fact that many people think they are a healthier-some arguing virtually risk free-alternatives to regular cigarettes.

blog 2.10 breakeven

As long as the price is above the average variable cost-a cost that can be changed depending on how much is produced-firms will continue to remain in an industry. Anything below that, and they are making economic losses. They have no incentive to remain in the market, and will exit until equilibrium is reached.

Seeing large potential profits, many companies pounced on the opportunity to get involved in the e-cigarette industry in its nascent stage. As I learned from my price theory class last semester, firms will continue to inundate a market as long as there is room for profit. They will no longer enter or exit an industry when they reach the breakeven point. With so many e-cigarette brands, a legitimate danger is that the market will quickly be saturated with the product.  In response to this concern, brands all try to differentiate their products from competitors’.

Flavors are banned in regular cigarettes. In e-cigarretes, with the lack of regulation, now anything goes. Of course, making a bubble gum flavor does not help support e-cigarette companies' claims that they are not trying to appeal to a younger audience.

Flavors are banned in regular cigarettes. In e-cigarettes, with the lack of regulation,  anything goes. Of course, making a bubble gum flavor does not help support e-cigarette companies’ claims that they are not trying to appeal to a younger audience.

The possibilities for differentiation, specialization, and expansion are virtually endless for e-cigarette companies. They have at their disposal the Holy Grail of production in a capitalist market: nearly zero regulation. Because the product appeared so recently, the FDA and the federal government has not had the opportunity to pass any laws that might ultimately stifle sales or inhibit growth. Sales of old fashioned cigarettes are mired due to high excise taxes and bans on flavors and ads.  E-cigarettes do not face any of these barriers, although the FDA did mention it would be pursuing regulations this past August. For now, e-cigarette brands are exploiting their freedom to appeal to consumers by making unique looking pipes, exciting flavors, and enticing advertising. This free market situation is ideal for companies, enabling them to maximize profits without any government restrictions. Many Americans, though, view an entirely unregulated industry as treacherous because it enables business to do whatever they want to earn profits, even at the sake of customer safety.

Are we regressing back into  an era where we glamorize smoking? Images like these evoke the luxurious advertising for cigarettes that were once ubiquitous  in American society.

Are we regressing back into an era where we glamorize smoking? Images like these evoke the luxurious advertising for cigarettes that were once ubiquitous in American society.

As might be expected, the introduction of e-cigarettes has paved the way for many questions regarding its safety. Is it indeed a healthy alternative to cigarettes? Is it a gateway vehicle to smoking regular cigarettes? Does it entice younger consumers? Regarding the last question, I can definitely say that many young people are smoking e-cigarettes. The high school near my house in New Jersey is now littered with them. More than just an eyesore, it is a concern. I suppose I was premature in my prediction that my generation would lead to the extinction of cigarette smoking, once and for all. It is crucial to be aware of this new, potentially dominating force in the market, as it is sure to have social, economic, and political implications for years to come.