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

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  • Lalith Munasinghe
  • Nachum Sicherman

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.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 7542.

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Date of creation: Feb 2000
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Publication status: published as Lalith Munasinghe & Nachum Sicherman, 2006. "Why Do Dancers Smoke? Smoking, Time Preference, and Wage Dynamics," Eastern Economic Journal, Eastern Economic Association, vol. 32(4), pages 595-616, Fall.
Handle: RePEc:nbr:nberwo:7542

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  1. Kenkel, D.S., 1988. "Health Behavior, Health Knowledge, And Schooling," Papers, Pennsylvania State - Department of Economics 10-88-3, Pennsylvania State - Department of Economics.
  2. Michael Grossman, 1976. "The Correlation between Health and Schooling," NBER Chapters, National Bureau of Economic Research, Inc, in: Household Production and Consumption, pages 147-224 National Bureau of Economic Research, Inc.
  3. Victor R. Fuchs, 1982. "Time Preference and Health: An Exploratory Study," NBER Chapters, National Bureau of Economic Research, Inc, in: Economic Aspects of Health, pages 93-120 National Bureau of Economic Research, Inc.
  4. 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.
  5. Loewenstein, George & Thaler, Richard H, 1989. "Intertemporal Choice," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 3(4), pages 181-93, Fall.
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Cited by:
  1. Harrell Chesson & Jami Leichliter & Gregory Zimet & Susan Rosenthal & David Bernstein & Kenneth Fife, 2006. "Discount rates and risky sexual behaviors among teenagers and young adults," Journal of Risk and Uncertainty, Springer, Springer, vol. 32(3), pages 217-230, May.
  2. Arabsheibani, Reza & Staneva, Anita V., 2012. "Returns to Education in Russia: Where There Is Risky Sexual Behaviour There Is Also an Instrument," IZA Discussion Papers 6726, Institute for the Study of Labor (IZA).
  3. Andrew Postlewaite & Dan Silverman, 2004. "Social Isolation and Inequality," PIER Working Paper Archive, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania 04-017, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
  4. Josef Fersterer & Rudolf Winter-Ebmer, 2000. "Smoking, discount rates, and returns to education," Economics working papers, Department of Economics, Johannes Kepler University Linz, Austria 2000-02, Department of Economics, Johannes Kepler University Linz, Austria.
  5. Shane Frederick & George Loewenstein & Ted O'Donoghue, 2002. "Time Discounting and Time Preference: A Critical Review," Journal of Economic Literature, American Economic Association, American Economic Association, vol. 40(2), pages 351-401, June.
  6. Borghans,Lex & Golsteyn,Bart H.H., 2005. "Time Discounting and the Body Mass Index," ROA Research Memorandum, Maastricht University, Research Centre for Education and the Labour Market (ROA) 006, Maastricht University, Research Centre for Education and the Labour Market (ROA).
  7. Borghans, Lex & Golsteyn, Bart H.H., 2006. "Time discounting and the body mass index: Evidence from the Netherlands," Economics & Human Biology, Elsevier, Elsevier, vol. 4(1), pages 39-61, January.
  8. Stefano DellaVigna & M. Daniele Paserman, 2005. "Job Search and Impatience," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 23(3), pages 527-588, July.
  9. Matt Dickson, 2013. "The Causal Effect of Education on Wages Revisited," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, Department of Economics, University of Oxford, vol. 75(4), pages 477-498, 08.
  10. Adriana Lleras-Muney, 2001. "The Relationship Between Education and Adult Mortality in the U. S," Working Papers, Princeton University, Woodrow Wilson School of Public and International Affairs, Center for Health and Wellbeing. 272, Princeton University, Woodrow Wilson School of Public and International Affairs, Center for Health and Wellbeing..
  11. Dohmen, Thomas, 2014. "Behavioural Labour Economics: Advances and Future Directions," IZA Discussion Papers 8263, Institute for the Study of Labor (IZA).
  12. Adriana Lleras-Muney, 2002. "The Relationship Between Education and Adult Mortality in the United States," NBER Working Papers 8986, National Bureau of Economic Research, Inc.
  13. Donald P. Morgan, 2007. "Defining and detecting predatory lending," Staff Reports, Federal Reserve Bank of New York 273, Federal Reserve Bank of New York.
  14. Elena Gouskova & Ngina Chiteji & Frank Stafford, 2010. "Pension Participation: Do Parents Transmit Time Preference?," Journal of Family and Economic Issues, Springer, Springer, vol. 31(2), pages 138-150, June.
  15. Annemarie Nelen & Andries de Grip, 2009. "Why Do Part-time Workers Invest Less in Human Capital than Full-timers?," LABOUR, CEIS, CEIS, vol. 23(s1), pages 61-83, 03.
  16. Victor Rios-Rull & Josep Pijoan-Mas, 2005. "Health and Heterogeneity," 2005 Meeting Papers, Society for Economic Dynamics 644, Society for Economic Dynamics.

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