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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. Loewenstein, George & Thaler, Richard H, 1989. "Intertemporal Choice," Journal of Economic Perspectives, American Economic Association, vol. 3(4), pages 181-93, Fall.
  2. Kenkel, Donald S, 1991. "Health Behavior, Health Knowledge, and Schooling," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 99(2), pages 287-305, April.
  3. 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.
  4. Michael Grossman, 1973. "The Correlation Between Health and Schooling," NBER Working Papers 0022, National Bureau of Economic Research, Inc.
  5. 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.
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Cited by:
  1. 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.
  2. 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, vol. 32(3), pages 217-230, May.
  3. Shane Frederick & George Loewenstein & Ted O'Donoghue, 2002. "Time Discounting and Time Preference: A Critical Review," Journal of Economic Literature, American Economic Association, vol. 40(2), pages 351-401, June.
  4. Dohmen, Thomas, 2014. "Behavioural Labour Economics: Advances and Future Directions," IZA Discussion Papers 8263, Institute for the Study of Labor (IZA).
  5. Dickson, Matt, 2009. "The Causal Effect of Education on Wages Revisited," IZA Discussion Papers 4419, Institute for the Study of Labor (IZA).
  6. Andrew Postlewaite & Dan Silverman, 2005. "Social isolation and inequality," Journal of Economic Inequality, Springer, vol. 3(3), pages 243-262, December.
  7. Victor Rios-Rull & Josep Pijoan-Mas, 2005. "Health and Heterogeneity," 2005 Meeting Papers 644, Society for Economic Dynamics.
  8. Fersterer, Josef & Winter-Ebmer, Rudolf, 2003. "Smoking, discount rates, and returns to education," Economics of Education Review, Elsevier, Elsevier, vol. 22(6), pages 561-566, December.
  9. Adriana Lleras-Muney, 2001. "The Relationship Between Education and Adult Mortality in the U. S," Working Papers 272, Princeton University, Woodrow Wilson School of Public and International Affairs, Center for Health and Wellbeing..
  10. Nelen Annemarie & Grip Andries de, 2008. "Why do Part-Time Workers invest less in Human Capital than Full-Timers?," ROA Research Memorandum 004, Maastricht University, Research Centre for Education and the Labour Market (ROA).
  11. 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.
  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 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, vol. 31(2), pages 138-150, June.
  15. 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).
  16. Borghans, Lex & Golsteyn, Bart H.H., 2005. "Time Discounting and the Body Mass Index," IZA Discussion Papers 1597, Institute for the Study of Labor (IZA).

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