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The effect of smoking on health using a sequential self-selection model

  • Kajal Lahiri

    (Department of Economics, State University of New York at Albany, USA)

  • Jae G. Song

    (Department of Economics, State University of New York at Albany, USA)

We estimate a structural model of individual smoking behaviour emphasizing the role of individual risk belief on smoking choices. Our model consists of five equations: two selection equations for initiation and cessation decisions, and three switching outcome regressions for nonsmokers, ex-smokers, and current smokers. The presence of significant self-selectivity implies that the health effects of smoking based on sample proportions do not correctly indicate the true risk of cigarette smoking. Further, our evidence suggests that the self-selection in the cessation decision, but not in the initiation decision, is consistent with economic rationality. We estimate the model by full information maximum likelihood (FIML) with starting values from heteroskedasticity corrected Heckman-Lee two-step method using newly released Health and Retirement Study (HRS) data. Copyright © 2000 John Wiley & Sons, Ltd.

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Article provided by John Wiley & Sons, Ltd. in its journal Health Economics.

Volume (Year): 9 (2000)
Issue (Month): 6 ()
Pages: 491-511

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Handle: RePEc:wly:hlthec:v:9:y:2000:i:6:p:491-511
Contact details of provider: Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/5749

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