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Smoking, Discount Rates, and Returns to Education

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Author Info

  • Fersterer, Josef

    () (University of Linz)

  • Winter-Ebmer, Rudolf

    () (University of Linz)

Abstract

Individual time preference determines schooling enrolment. Moreover, smoking behavior in early ages has been shown to be highly related to time preference rates. Accordingly, we use smoking at age 16 as an instrument for schooling in order to cope with ability bias in a returns to education regression. Doing this for Austrian cross-sectional data, we find no evidence of ability bias.

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File URL: http://ftp.iza.org/dp126.pdf
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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 126.

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Length: 16 pages
Date of creation: Mar 2000
Date of revision:
Publication status: published in: Economics of Education Review, 2003, 22 (6), 561-566
Handle: RePEc:iza:izadps:dp126

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Postal: IZA, P.O. Box 7240, D-53072 Bonn, Germany
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Postal: IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany
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Keywords: discount rates; Returns to education; instrumental variables; ability bias;

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References

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  1. Fersterer, Josef & Winter-Ebmer, Rudolf, 1999. "Are Austrian Returns to Education Falling Over Time?," IZA Discussion Papers 72, Institute for the Study of Labor (IZA).
  2. Phillip B. Levine & Tara Gustafson & Ann D. Velenchik, 1997. "More bad news for smokers? The effects of cigarette smoking on wages," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 50(3), pages 493-509, April.
  3. William N. Evans & Edward Montgomery, 1994. "Education and Health: Where There's Smoke There's an Instrument," NBER Working Papers 4949, National Bureau of Economic Research, Inc.
  4. Belzil, Christian & Hansen, Jörgen, 1999. "Subjective Discount Rates, Intergenerational Transfers and the Return to Schooling," IZA Discussion Papers 60, Institute for the Study of Labor (IZA).
  5. Imbens, Guido W & Angrist, Joshua D, 1994. "Identification and Estimation of Local Average Treatment Effects," Econometrica, Econometric Society, vol. 62(2), pages 467-75, March.
  6. Ichino, Andrea & Winter-Ebmer, Rudolf, 1998. "Lower and Upper Bounds of Returns to Schooling: An Exercise in IV estimation with Different Instruments," CEPR Discussion Papers 2007, C.E.P.R. Discussion Papers.
  7. Hessel Oosterbeek & Hans van Ophem, 2000. "Schooling choices: Preferences, discount rates, and rates of return," Empirical Economics, Springer, vol. 25(1), pages 15-34.
  8. Lalith Munasinghe & Nachum Sicherman, 2000. "Why Do Dancers Smoke? Time Preference, Occupational Choice, and Wage Growth," NBER Working Papers 7542, National Bureau of Economic Research, Inc.
  9. Victor R. Fuchs, 1982. "Time Preference and Health: An Exploratory Study," NBER Working Papers 0539, National Bureau of Economic Research, Inc.
  10. Card, David, 1999. "The causal effect of education on earnings," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 30, pages 1801-1863 Elsevier.
  11. Brunello, Giorgio, 2000. "Absolute Risk Aversion and the Returns to Education," IZA Discussion Papers 192, Institute for the Study of Labor (IZA).
  12. Victor R. Fuchs, 1982. "Time Preference and Health: An Exploratory Study," NBER Chapters, in: Economic Aspects of Health, pages 93-120 National Bureau of Economic Research, Inc.
  13. Andrea Ichino & Rudolf Winter-Ebmer, 2004. "The Long-Run Educational Cost of World War II," Journal of Labor Economics, University of Chicago Press, vol. 22(1), pages 57-86, January.
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