Smoking, discount rates, and returns to education
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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- 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.
- Hessel Oosterbeek & Hans van Ophem, 2000. "Schooling choices: Preferences, discount rates, and rates of return," Empirical Economics, Springer, vol. 25(1), pages 15-34.
- 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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