In 2022, there were more than 48,000 firearm-related deaths in the United States, and firearms were the leading cause of death for Americans under the age of 19. But little is known about how the market for firearms works, and therefore how it could be regulated to improve public welfare.
These issues are driving research by economist Luis Armona, assistant professor of public policy at Harvard Kennedy School, who has co-authored two papers on the subject. He believes a better understanding of the basic economics of firearms—why consumers buy them, how manufacturers price them, and how regulations like taxes affect the behavior of market participants—will lead to better policies, reduced violence, and possibly even buy-in from pro-gun interest groups.
As different firearm policies roll out across the U.S., including increased taxes in states like California and Colorado or gun tax holidays in states like Mississippi and South Carolina, Armona’s research will offer policymakers an important tool in understanding how to balance the importance of guns to Americans with public health and safety.
“I grew up in the United States, so I’m intimately familiar with gun culture and the way guns can be an important part of the identity of those who own them but also have important consequences for public health,” Armona says. “But for nearly 30 years, the federal government did not fund research on firearms, and so our understanding of how these markets work is very undeveloped. In our research we try to estimate what drives people to purchase firearms and how we can improve existing regulation while balancing the political economy constraints surrounding firearm regulation.”
Armona and his co-author, Adam Rosenberg, a doctoral candidate at Stanford University, used gun purchase data from Massachusetts (one of the very first such datasets to be made publicly available) in combination with other national datasets to better understand the legal firearms market. While they did not have identifying data for individuals, they were able to see general characteristics: firearm buyers are much more likely to be male and live in areas that are more conservative (based on voting patterns), more rural, and less racially diverse. The research, “,” helps set the stage for further work by highlighting how primary data sources can shed light on fundamental features of the firearm market.
In a second research paper, “,” Armona and Rosenberg used detailed data on the demand and supply side of the gun market—the characteristics and prices of firearms, microdata from Massachusetts, and aggregate gun sales from other states—to understand how regulations would impact consumers and social welfare.
“If you lower taxes on long guns—shotguns and rifles—enough so that you can tax handguns a little more and gun consumers are just as well off, we estimate that you get substantial welfare improvements just by making this small change.”
Some facts immediately stood out to them. First, the ability to purchase firearms provides a lot of benefit to consumers: around $18 billion per year, just over 10% of the value to consumers from being able to purchase a new car. Second, there are already more guns in the United States than people, and existing firearms stay in usable condition for many years, which limits the impacts of firearm market regulations on public health outcomes, like gun deaths. “Unless you buy back all 330 million weapons that are in circulation, you can’t influence homicide rates as much as policymakers might like,” Armona says. “So, what those two facts combine to mean is that the trade-off between public health and the immense benefits that consumers receive from being able to buy guns is not trivial. These are similar magnitude objects.”
“A lot of people on the left who advocate for further gun regulation believe that we should just ban all guns. That would certainly have a sizable impact on firearm homicides and public health,” Armona says. “But guns are highly durable and there’s a huge stock, so banning the sale of new weapons is not going to make the biggest impact on total deaths and comes with meaningful harm to consumers. In addition, we know that the political capital to pass large-scale policy affecting firearms is scarce at the national level, in part due to the influence of gun rights advocacy groups.”
So, the researchers studied how to design a firearm regulation that both improves public health while also minimizing burden on consumers and manufacturers. Several of these regulations could be seen as neutral, or even improvements, from the perspective of gun buyers and interest groups like the National Rifle Association, for example.
The main policy tool they focus on is a roughly 10% flat tax on every gun that’s sold in the United States—a levy that has been in place since 1918 and is paid when firearm manufacturers sell to retailers. But since different guns have different likelihoods of being used in homicide—handguns are used in 90 to 95% of all homicides in the United States, according to the FBI—the researchers reasoned that it might not just be about taxing all guns at higher or lower rates. When it comes to public health, which guns you tax matters.
At least two states, California and Colorado, have recently approved new taxes on all firearms—California’s tax essentially doubles the existing tax to 20%, while Colorado increases the tax to 16.5%.
The researchers examined the effects an approach like California’s would have if implemented on the national gun market. They estimate the tax increase would reduce about 60 firearm deaths a year but would come at a cost of $400 million and $570 million to firearms consumers and manufacturers respectively. Moreover, gun owners in Republican states would be harmed the most. “Given the politically polarized views on firearm regulation in the U.S., with Republicans generally supporting laxer policy, this policy is likely to be politically infeasible,” the authors write.
With these real political constraints in mind, the authors considered an alternative taxation scheme that does not harm market participants, which in theory would be more politically palatable. “If you lower taxes on long guns—shotguns and rifles—enough so that you can tax handguns a little more and gun consumers are just as well off, we estimate that you get substantial welfare improvements just by making this small change,” Armona says. They estimated that this change would have about 40% the public health benefit of the larger tax on all guns (25 less firearm deaths per year). “And because this policy would be constructed in a way such that consumers are not harmed, it could face significantly less resistance from groups like the NRA or the National Shooting Sports Foundation, which is the industry lobby,” Armona says.
Armona sees fertile ground for further study in this area: "For example, it’s well known that the distribution of gun owners has a ‘long tail’—something like 20% of gun owners own 80% of the stock. Ultimately, what matters from a public health perspective is gun owners, not guns in circulation per se. So, for our next project we plan to use data on gun ownership patterns to better understand how to design buyback programs—how costly it may be to get the ‘long tail’ of gun owners to give up their guns, or if it is even worth the cost from a public health perspective.”
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Banner photograph by Patrick T. Fallon/AFP/Getty Images; Portrait by Ken Richardson.