Smoking and Endogenous Mortality: Does Heterogeneity in Life Expectancy Explain Differences in Smoking Behavior?

Abstract

This paper proposes a joint model of tobacco consumption and mortality over the life-cycle. The decision to smoke is a trade off between current utility derived from smoking and a mortality risk increasing with age. Thus, individuals with a shorter potential life expectancy have less incentive to cut back on smoking. We use detailed, long term, event history data on mortality, morbidity and smoking to empirically evaluate the ability of the rational addiction model with endogenous mortality to explain heterogeneity in smoking behaviour among adults.

We find that heterogeneity in potential life expectancy explains a significant part of the heterogeneity in smoking behaviour, even when conditioning on sex, education and occupation and information on other risky behaviour.

Keywords: smoking, endogenous mortality, intertemporal choice, heterogeneity

JEL Classification: C3, C5, D1, D9, I1