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Living Rationally Under The Volcano? An Empirical Analysis Of Heavy Drinking And Smoking

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  • Peter Arcidiacono
  • Holger Sieg
  • Frank Sloan

Abstract

This study investigates whether models of forward-looking behavior explain the observed patterns of heavy drinking and smoking of men in late middle age in the Health and Retirement Study better than myopic models. We develop and estimate a sequence of nested models that differ by their degree of forward-looking behavior. Our empirical findings suggest that forward looking models fit the data better than myopic models. These models also dominate other behavioral models based on out-of-sample predictions using data of men aged 70 and over. Myopic models predict rates of smoking for old individuals, which are significantly larger than those found in the data on elderly men. Copyright 2007 by the Economics Department Of The University Of Pennsylvania And Osaka University Institute Of Social And Economic Research Association.

Suggested Citation

  • Peter Arcidiacono & Holger Sieg & Frank Sloan, 2007. "Living Rationally Under The Volcano? An Empirical Analysis Of Heavy Drinking And Smoking," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 48(1), pages 37-65, February.
  • Handle: RePEc:ier:iecrev:v:48:y:2007:i:1:p:37-65
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    More about this item

    JEL classification:

    • I1 - Health, Education, and Welfare - - Health
    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General
    • H4 - Public Economics - - Publicly Provided Goods

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