Why Do Dancers Smoke? Time Preference, Occupational Choice, and Wage Growth

39 Pages Posted: 18 Oct 2010 Last revised: 27 Dec 2011

See all articles by Lalith Munasinghe

Lalith Munasinghe

Barnard College, Columbia University

Nachum Sicherman

Columbia University; IZA Institute of Labor Economics

Date Written: February 2000

Abstract

Time preference is a key determinant of occupational choice and investments in human capital. Since careers are characterized by different wage growth prospects, individual discount rates play an important role in the relative valuation of jobs or occupations. We predict that individuals with lower discount rates are more likely to select into jobs or occupations with steeper wage profiles. To test this hypothesis we use smoking as an instrument for time preference. Panel data from the NLSY (1979-94) are ideal for our purposes since it contains information on smoking behavior in addition to detailed work histories and other socio-economic variables. We find that smokers have substantially flatter wage profiles, and a higher marginal rate of substitution of current wages for future wages. Incidentally, a survey of several hundred undergraduates at Barnard and Columbia College show that dance majors have the highest smoking rate.

Suggested Citation

Munasinghe, Lalith and Sicherman, Nachum, Why Do Dancers Smoke? Time Preference, Occupational Choice, and Wage Growth (February 2000). NBER Working Paper No. w7542. Available at SSRN: https://ssrn.com/abstract=1693008

Lalith Munasinghe (Contact Author)

Barnard College, Columbia University ( email )

3009 Broadway
New York, NY 10027
United States
212-854-5652 (Phone)

Nachum Sicherman

Columbia University ( email )

3022 Broadway
New York, NY 10027
United States
212-854-4464 (Phone)
212-316-9355 (Fax)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Register to save articles to
your library

Register

Paper statistics

Downloads
22
Abstract Views
603
PlumX Metrics