Journal
HEALTH ECONOMICS
Volume 23, Issue 12, Pages 1443-1464Publisher
WILEY
DOI: 10.1002/hec.2998
Keywords
smoking; time preference; discount rate; hyperbolic discounting; the sign effect; the two-part model; panel
Funding
- Osaka University
- Japan Society for the Promotion of Science [B 21330046]
- Joint Usage/Research Center Projects of ISER from the Ministry of Education, Culture, Sports, Science and Technology
- Grants-in-Aid for Scientific Research [21330046] Funding Source: KAKEN
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By using a panel survey of Japanese adults, we show that smoking behavior is associated with personal time discounting and its biases, such as hyperbolic discounting and the sign effect, in the way that theory predicts: smoking depends positively on the discount rate and the degree of hyperbolic discounting and negatively on the presence of the sign effect. Positive effects of hyperbolic discounting on smoking are salient for naive people, who are not aware of their self-control problem. By estimating smoking participation and smokers' cigarette consumption in Cragg's two-part model, we find that the two smoking decisions depend on different sets of time-discounting variables. Particularly, smoking participation is affected by being a naive hyperbolic discounter, whereas the discount rate, the presence of the sign effect, and a hyperbolic discounting proxy constructed from procrastination behavior vis-a-vis doing homework assignments affect both types of decision making. The panel data enable us to analyze the over-time instability of elicited discount rates. The instability is shown to come from measurement errors, rather than preference shocks on time preference. Several evidences indicate that the detected associations between time preferences and smoking behavior are interpersonal one, rather than within-personal one. Copyright (c) 2013 John Wiley & Sons, Ltd.
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