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Individual discount rates and smoking: Evidence from a field experiment in Denmark

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  • Harrison, Glenn W.
  • Lau, Morten I.
  • Rutström, E. Elisabet

Abstract

We elicit measures of individual discount rates from a representative sample of the Danish population and test two substantive hypotheses. The first hypothesis is that smokers have higher individual discount rates than non-smokers. The second hypothesis is that smokers are more likely to have time inconsistent preferences than non-smokers, where time inconsistency is indicated by a hyperbolic discounting function. We control for the concavity of the utility function in our estimates of individual discount rates and find that male smokers have significantly higher discount rates than male non-smokers. However, smoking has no significant association with discount rates among women. This result is robust across exponential and hyperbolic discounting functions. We consider the sensitivity of our conclusions to a statistical specification that allows each observation to potentially be generated by more than one latent data-generating process.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Health Economics.

Volume (Year): 29 (2010)
Issue (Month): 5 (September)
Pages: 708-717

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Handle: RePEc:eee:jhecon:v:29:y:2010:i:5:p:708-717

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Web page: http://www.elsevier.com/locate/inca/505560

Related research

Keywords: Smoking Discount rates Risk aversion Time inconsistency;

References

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  1. Thomas Dohmen & Armin Falk & David Huffman & Uwe Sunde & Juergen Schupp & Gert Wagner, 2005. "Individual Risk Attitudes: New Evidence from a Large, Representative, Experimentally-Validated Survey," Working Papers 2096, The Field Experiments Website.
  2. Blondel, Serge & Loheac, Youenn & Rinaudo, Stephane, 2007. "Rationality and drug use: An experimental approach," Journal of Health Economics, Elsevier, vol. 26(3), pages 643-658, May.
  3. Glenn W. Harrison & James P. Feehan & Alison C. Edwards & Jorge Segovia, 2003. "Cigarette Smoking and the Cost of Hospital and Physician Care," Canadian Public Policy, University of Toronto Press, vol. 29(1), pages 1-19, March.
  4. Jeffrey M. Wooldridge, 2003. "Cluster-Sample Methods in Applied Econometrics," American Economic Review, American Economic Association, vol. 93(2), pages 133-138, May.
  5. Fudenberg, Drew & Levine, David, 2006. "A Dual-Self Model of Impulse Control," Scholarly Articles 3196335, Harvard University Department of Economics.
  6. Charles A. Holt & Susan K. Laury, 2002. "Risk Aversion and Incentive Effects," American Economic Review, American Economic Association, vol. 92(5), pages 1644-1655, December.
  7. Steffen Andersen & Glenn W. Harrison & Morten I. Lau & E. Elisabet Rutström, 2008. "Eliciting Risk and Time Preferences," Econometrica, Econometric Society, vol. 76(3), pages 583-618, 05.
  8. Glenn Harrison & Morten Lau & Elisabet Rutstrom, 2004. "Estimating risk attitudes in denmark: A field experiment," Artefactual Field Experiments 00059, The Field Experiments Website.
  9. Christopher F. Chabris & David Laibson & Carrie L. Morris & Jonathon P. Schuldt & Dmitry Taubinsky, 2008. "Individual Laboratory-Measured Discount Rates Predict Field Behavior," NBER Working Papers 14270, National Bureau of Economic Research, Inc.
  10. Glenn W. Harrison & John A. List, 2004. "Field Experiments," Journal of Economic Literature, American Economic Association, vol. 42(4), pages 1009-1055, December.
  11. Glenn W. Harrison & Morten I. Lau & Melonie B. Williams, 2002. "Estimating Individual Discount Rates in Denmark: A Field Experiment," American Economic Review, American Economic Association, vol. 92(5), pages 1606-1617, December.
  12. Andersen, Steffen & Harrison, Glenn W. & Lau, Morten Igel & Rutström, E. Elisabet, 2010. "Preference heterogeneity in experiments: Comparing the field and laboratory," Journal of Economic Behavior & Organization, Elsevier, vol. 73(2), pages 209-224, February.
  13. W. Kip Viscusi & Joni Hersch, 2001. "Cigarette Smokers As Job Risk Takers," The Review of Economics and Statistics, MIT Press, vol. 83(2), pages 269-280, May.
  14. Maribeth Coller & Melonie Williams, 1999. "Eliciting Individual Discount Rates," Experimental Economics, Springer, vol. 2(2), pages 107-127, December.
  15. Charles A. Holt & Susan K. Laury, 2005. "Risk Aversion and Incentive Effects: New Data without Order Effects," American Economic Review, American Economic Association, vol. 95(3), pages 902-912, June.
  16. Harrison, Glen W. & Ronald M. Harstad & E. Elisabet Rutström, 1995. "Experimental Methods and Elicitation of Values," Discussion Paper Serie B 349, University of Bonn, Germany.
  17. Jahn K. Hakes & W. Kip Viscusi, 2007. "Automobile Seatbelt Usage and the Value of Statistical Life," Southern Economic Journal, Southern Economic Association, vol. 73(3), pages 659–676, January.
  18. Anderson, Lisa R. & Mellor, Jennifer M., 2008. "Predicting health behaviors with an experimental measure of risk preference," Journal of Health Economics, Elsevier, vol. 27(5), pages 1260-1274, September.
  19. Glenn Harrison & E. Rutström, 2009. "Expected utility theory and prospect theory: one wedding and a decent funeral," Experimental Economics, Springer, vol. 12(2), pages 133-158, June.
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Citations

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Cited by:
  1. Miraldo, M & Galizzi, M & Stavropoulou, C, 2013. "In sickness but not in wealth: Field evidence on patients? risk preferences in the financial and health domain," Working Papers 12579, Imperial College, London, Imperial College Business School.
  2. Finke, Michael S. & Huston, Sandra J., 2013. "Time preference and the importance of saving for retirement," Journal of Economic Behavior & Organization, Elsevier, vol. 89(C), pages 23-34.
  3. Dohmen, Thomas & Falk, Armin & Huffman, David B. & Sunde, Uwe, 2012. "Interpreting Time Horizon Effects in Inter-Temporal Choice," IZA Discussion Papers 6385, Institute for the Study of Labor (IZA).
  4. Booij, A.S. & Leuven, E. & Oosterbeek, H., 2010. "The role of information in the take-up of student loans," Working Papers 32, Top Institute for Evidence Based Education Research.
  5. Yamamura, Eiji, 2014. "Time preference and perceptions about government spending and tax: Smokers’ dependence on government support," MPRA Paper 55659, University Library of Munich, Germany.
  6. Lynn Conell-Price & Julian Jamison, 2012. "Predicting health behaviors with economic preferences and perceived control," Working Papers 12-16, Federal Reserve Bank of Boston.

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