Does time preference affect smoking behavior? A dynamic panel analysis

The association between time preference and smoking behavior forms supportive evidence for the rational addiction model. Individuals with a high discount rate place more weight on the immediate satisfaction of smoking than on its future consequences. However, the endogenous time preference model proposes an alternative explanation, that is, smoking behavior affects time preference. Since previous studies have overlooked it, using a dynamic panel analysis, I analyze the effect of time preferences on smoking behavior, while controlling for the effect of past smoking behavior. I use nationwide micro panel data from Japan and present three main findings. First, as in the previous literature, using a probit model, I find positive associations between time preferences and smoking behavior. Second, using a dynamic panel analysis, I find that time preferences affect smoking behavior significantly for women, but not for men. Third, male smokers who have a low discount rate are more likely to want to quit or reduce smoking behavior. This result implies that, while male smokers are concerned about the future consequences of smoking, they cannot manage to quit.