Economic theory and evidence on smoking behavior of adults

Abstract

Aims: To describe: (i) three alternative conceptual frameworks used by economists to study addictive behaviors: rational, imperfectly rational and irrational addiction; (ii) empirical economic evidence on each framework and specific channels to explain adult smoking matched to the frameworks; and (iii) policy implications for each framework.

Methods: A systematic review and appraisal of important theoretical and empirical economic studies on smoking.

Results: There is some empirical support for each framework. For rational and imperfectly rational addiction there is some evidence that anticipated future cigarette prices influence current cigarette consumption, and quitting costs are high for smokers. Smokers are more risk-tolerant in the financial domain than are others and tend to attach a lower value to being in good health. Findings on differences in rates of time preference by smoking status are mixed; however, short-term rates are higher than long-term rates for both smokers and non-smokers, a stylized fact consistent with hyperbolic discounting. The economic literature lends no empirical support to the view that mature adults smoke because they underestimate the probability of harm to health from smoking. In support of the irrationality framework, smokers tend to be more impulsive than others in domains not related directly to smoking, implying that they may be sensitive to cues that trigger smoking.

Conclusions: Much promising economic research uses the imperfectly rational addiction framework, but empirical research based on this framework is still in its infancy.