IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/12615.html
   My bibliography  Save this paper

Time Preference, Time Discounting, and Smoking Decisions

Author

Listed:
  • Ahmed Khwaja
  • Dan Silverman
  • Frank Sloan

Abstract

This study examines the relationship between time discounting, other sources of time preference, and intertemporal choices about smoking. Using a survey fielded for our analysis, we elicit rates of time discount from choices in financial and health domains. We also examine the relationship between other determinants of time preference and smoking status. We find very high rates of time discount in the financial realm for a horizon of one year, irrespective of smoking status. In the health domain, the implied rates of time discount decline with the length of the time delay (hyperbolic discounting) and the sign of the payoff (the "sign effect"). We use a series of questions about the willingness to undergo a colonoscopy to elicit short- and long-run rates of discount in a quasi-hyperbolic discounting framework, finding no evidence that short-run and long-run rates of discount differ by smoking status. Using more general measures of time preference, i.e., impulsivity and length of financial planning horizon, smokers are more impatient. However, neither of these measures is significantly correlated with the measures of time discounting. Our results indicate that subjective rates of time discount revealed through committed choice scenarios are not related to differences in smoking behavior. Rather, a combination of more general measures of time preference and self-control, i.e., impulsivity and financial planning, are more closely related to the smoking decision.

Suggested Citation

  • Ahmed Khwaja & Dan Silverman & Frank Sloan, 2006. "Time Preference, Time Discounting, and Smoking Decisions," NBER Working Papers 12615, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:12615
    Note: EH
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w12615.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Emre Ozdenoren & Stephen W. Salant & Dan Silverman, 2012. "Willpower And The Optimal Control Of Visceral Urges," Journal of the European Economic Association, European Economic Association, vol. 10(2), pages 342-368, April.
    2. David K. Levine & Drew Fudenberg, 2006. "A Dual-Self Model of Impulse Control," American Economic Review, American Economic Association, vol. 96(5), pages 1449-1476, December.
    3. Matthew Rabin & Ted O'Donoghue, 1999. "Doing It Now or Later," American Economic Review, American Economic Association, vol. 89(1), pages 103-124, March.
    4. Victor R. Fuchs, 1982. "Economic Aspects of Health," NBER Books, National Bureau of Economic Research, Inc, number fuch82-1, January.
    5. O'Donoghue, Ted & Rabin, Matthew, 2006. "Optimal sin taxes," Journal of Public Economics, Elsevier, vol. 90(10-11), pages 1825-1849, November.
    6. Gary S. Becker & Casey B. Mulligan, 1997. "The Endogenous Determination of Time Preference," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(3), pages 729-758.
    7. Thaler, Richard, 1981. "Some empirical evidence on dynamic inconsistency," Economics Letters, Elsevier, vol. 8(3), pages 201-207.
    8. Jonathan Gruber & Botond Köszegi, 2001. "Is Addiction "Rational"? Theory and Evidence," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 116(4), pages 1261-1303.
    9. B. Douglas Bernheim & Antonio Rangel, 2004. "Addiction and Cue-Triggered Decision Processes," American Economic Review, American Economic Association, vol. 94(5), pages 1558-1590, December.
    10. 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.
    11. John Ameriks & Andrew Caplin & John Leahy, 2003. "Wealth Accumulation and the Propensity to Plan," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 118(3), pages 1007-1047.
    12. Thaler, Richard H & Shefrin, H M, 1981. "An Economic Theory of Self-Control," Journal of Political Economy, University of Chicago Press, vol. 89(2), pages 392-406, April.
    13. F. Thomas Juster & Richard Suzman, 1995. "An Overview of the Health and Retirement Study," Journal of Human Resources, University of Wisconsin Press, vol. 30, pages 7-56.
    14. David Laibson, 2001. "A Cue-Theory of Consumption," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 116(1), pages 81-119.
    15. John Ameriks & Andrew Caplin & John Leahy & Tom Tyler, 2004. "Measuring Self-Control," NBER Working Papers 10514, National Bureau of Economic Research, Inc.
    16. Faruk Gul & Wolfgang Pesendorfer, 2004. "Self-Control and the Theory of Consumption," Econometrica, Econometric Society, vol. 72(1), pages 119-158, January.
    17. Loewenstein, George, 1987. "Anticipation and the Valuation of Delayed Consumption," Economic Journal, Royal Economic Society, vol. 97(387), pages 666-684, September.
    18. Gruber, Jonathan & Koszegi, Botond, 2004. "Tax incidence when individuals are time-inconsistent: the case of cigarette excise taxes," Journal of Public Economics, Elsevier, vol. 88(9-10), pages 1959-1987, August.
    19. David Laibson, 1997. "Golden Eggs and Hyperbolic Discounting," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(2), pages 443-478.
    20. Loewenstein, George & O'Donoghue, Ted, 2004. "Animal Spirits: Affective and Deliberative Processes in Economic Behavior," Working Papers 04-14, Cornell University, Center for Analytic Economics.
    21. Taylor Jr., D.H. & Hasselblad, V. & Henley, S.J. & Thun, M.J. & Sloan, F.A., 2002. "Benefits of smoking cessation for longevity," American Journal of Public Health, American Public Health Association, vol. 92(6), pages 990-996.
    22. Frank A. Sloan & Jan Ostermann & Christopher Conover & Donald H. Taylor, Jr. & Gabriel Picone, 2006. "The Price of Smoking," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262693453, December.
    23. Matthew Rabin & Ted O'Donoghue, 1999. "Doing It Now or Later," American Economic Review, American Economic Association, vol. 89(1), pages 103-124, March.
    24. Read, Daniel, 2001. "Is Time-Discounting Hyperbolic or Subadditive?," Journal of Risk and Uncertainty, Springer, vol. 23(1), pages 5-32, July.
    25. Loewenstein, George & Thaler, Richard H, 1989. "Intertemporal Choice," Journal of Economic Perspectives, American Economic Association, vol. 3(4), pages 181-193, Fall.
    26. B. Douglas Bernheim & Jonathan Skinner & Steven Weinberg, 2001. "What Accounts for the Variation in Retirement Wealth among U.S. Households?," American Economic Review, American Economic Association, vol. 91(4), pages 832-857, September.
    27. Uri Benzion & Amnon Rapoport & Joseph Yagil, 1989. "Discount Rates Inferred from Decisions: An Experimental Study," Management Science, INFORMS, vol. 35(3), pages 270-284, March.
    28. Fuchs, Victor R. (ed.), 1982. "Economic Aspects of Health," National Bureau of Economic Research Books, University of Chicago Press, number 9780226267852, August.
    29. Read, Daniel & Read, N. L., 2004. "Time discounting over the lifespan," Organizational Behavior and Human Decision Processes, Elsevier, vol. 94(1), pages 22-32, May.
    30. Benhabib, Jess & Bisin, Alberto, 2005. "Modeling internal commitment mechanisms and self-control: A neuroeconomics approach to consumption-saving decisions," Games and Economic Behavior, Elsevier, vol. 52(2), pages 460-492, August.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Emre Ozdenoren & Stephen W. Salant & Dan Silverman, 2012. "Willpower And The Optimal Control Of Visceral Urges," Journal of the European Economic Association, European Economic Association, vol. 10(2), pages 342-368, April.
    2. Xavier Giné & Jessica Goldberg & Dan Silverman & Dean Yang, 2018. "Revising Commitments: Field Evidence on the Adjustment of Prior Choices," Economic Journal, Royal Economic Society, vol. 128(608), pages 159-188, February.
    3. Marco Casari, 2009. "Pre-commitment and flexibility in a time decision experiment," Journal of Risk and Uncertainty, Springer, vol. 38(2), pages 117-141, April.
    4. Patricia Sourdin, 2005. "Pension Contribution as a Commitment Device: Evidence of Sophistication among Time-inconsistent Households," School of Economics and Public Policy Working Papers 2005-17, University of Adelaide, School of Economics and Public Policy.
    5. Stefano DellaVigna & M. Daniele Paserman, 2005. "Job Search and Impatience," Journal of Labor Economics, University of Chicago Press, vol. 23(3), pages 527-588, July.
    6. Méder, Zsombor Z. & Flesch, János & Peeters, Ronald, 2017. "Naiveté and sophistication in dynamic inconsistency," Mathematical Social Sciences, Elsevier, vol. 87(C), pages 40-54.
    7. Daniel J. Benjamin & Sebastian A. Brown & Jesse M. Shapiro, 2013. "Who Is ‘Behavioral’? Cognitive Ability And Anomalous Preferences," Journal of the European Economic Association, European Economic Association, vol. 11(6), pages 1231-1255, December.
    8. Lucks, Konstantin, 2016. "The Impact of Self-Control on Investment Decisions," MPRA Paper 73099, University Library of Munich, Germany.
    9. Kan, Kamhon, 2007. "Cigarette smoking and self-control," Journal of Health Economics, Elsevier, vol. 26(1), pages 61-81, January.
    10. Klaus Nehring, 2006. "Self-Control through Second-Order Preferences," Levine's Bibliography 321307000000000391, UCLA Department of Economics.
    11. Kang, Myong-Il & Ikeda, Shinsuke, 2016. "Time discounting, present biases, and health-related behaviors: Evidence from Japan," Economics & Human Biology, Elsevier, vol. 21(C), pages 122-136.
    12. Ciccarelli, Carlo & Giamboni, Luigi & Waldmann, Robert, 2007. "Cigarette smoking, pregnancy, forward looking behavior and dynamic inconsistency," MPRA Paper 8878, University Library of Munich, Germany.
    13. Fernando S. Machado & Rajiv K. Sinha, 2007. "Smoking Cessation: A Model of Planned vs. Actual Behavior for Time-Inconsistent Consumers," Marketing Science, INFORMS, vol. 26(6), pages 834-850, 11-12.
    14. Lu, Shih En, 2016. "Models of limited self-control: Comparison and implications for bargaining," Economics Letters, Elsevier, vol. 145(C), pages 186-191.
    15. Abhijit Banerjee & Sendhil Mullainathan, 2010. "The Shape of Temptation: Implications for the Economic Lives of the Poor," Working Papers id:2484, eSocialSciences.
    16. Laajaj, Rachid, 2012. "Closing the Eyes on a Gloomy Future: Psychological Causes and Economic Consequences," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 123933, Agricultural and Applied Economics Association.
    17. Galizzi, Matteo M. & Miraldo, Marisa & Stavropoulou, Charitini & van der Pol, Marjon, 2016. "Doctor–patient differences in risk and time preferences: A field experiment," Journal of Health Economics, Elsevier, vol. 50(C), pages 171-182.
    18. John Ameriks & Andrew Caplin & John Leahy & Tom Tyler, 2004. "Measuring Self-Control," NBER Working Papers 10514, National Bureau of Economic Research, Inc.
    19. Laajaj, Rachid, 2017. "Endogenous time horizon and behavioral poverty trap: Theory and evidence from Mozambique," Journal of Development Economics, Elsevier, vol. 127(C), pages 187-208.
    20. Sloan, Frank A. & Eldred, Lindsey M. & Xu, Yanzhi, 2014. "The behavioral economics of drunk driving," Journal of Health Economics, Elsevier, vol. 35(C), pages 64-81.

    More about this item

    JEL classification:

    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:12615. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.