Time Discounting and Smoking Behavior: Evidence from a Panel Survey

Abstract

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 naïve 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 naïve hyperbolic discounter, whereas the discount rate, the presence of the sign effect, and a hyperbolic discounting proxy constructed from procrastination behavior vis‐à‐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 © 2013 John Wiley & Sons, Ltd.

To Vaccinate or to Procrastinate? That is the Prevention Question

“…Although averaging over discount factors likely reduces measurement error of our time preference variables, concerns regarding the validity of these measures remain because of the hypothetical nature of financial tradeoffs. Kang and Ikeda (), however, report ample evidence that time preferences elicited through incentivized economic experiments do not differ systematically from those obtained through hypothetical questions (p. 1448). But then, elicited time preferences should be correlated with variables that are known to be affected by time preferences, most importantly health and education (Fuchs, ).…”

Physical Activity, Present Bias, and Habit Formation: Theory and Evidence from Longitudinal Data

“…Grignon (2009) find present bias is not correlated with starting smoking but is negatively correlated with quitting smoking. The empirical link between present bias and smoking is also found by Burks et al (2012) and Kang and Ikeda (2013). We expect that individuals who smoked in 2000 are more likely to have present bias, and are more likely to quit and less likely to start participating in physical activity later in the sample.…”

“…Our data do not have directly elicited time preference measures or a clean "natural experiment" for habit formation. We draw from studies using directly elicited time preference measures and behavioral outcomes (Burks et al (2012), Grignon (2009), Kang and Ikeda (2013), and Meier and Sprenger (2010)), and use smoking and the accumulation of credit card debt to proxy for present bias.…”

“…The second proxy variable is an indicator for reported smoking in 2000. Smoking has been linked to present biased time preferences in previous research (Burks et al (2012), Grignon (2009) and Kang and Ikeda (2013)). About 28-29% of the sample exhibit these behaviors.…”

“…When direct measures of individuals' time preference are not available, the critical aspect of empirically testing the negative impact of present bias on physical activity participation lies in finding a reasonable proxy for present bias. Studies that link directly elicited time preference measures to individual outcomes have found significant correlation between present bias and smoking (Burks et al (2012), Grignon (2009) and Kang and Ikeda (2013)) and accumulation of credit card debt (Meier and Sprenger (2010)). We use information from the BHPS to construct proxy variables for present bias using responses to questions about past smoking and accumulation of credit card debt.…”