Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/279070 
Year of Publication: 
2023
Series/Report no.: 
IZA Discussion Papers No. 16372
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
This paper tests whether young and adult smokers have different time preferences, in particular with respect to time consistency. The recent introduction of Tobacco 21 law in the US were in part motivated by allegedly inconsistent time preferences of the young consumers. This research empirically tests this hypothesis using individual cigarettes consumption longitudinal data from RLMS, estimating a quasi-hyperbolic discounting rational addiction model for young and adult smokers separately. While our test rejects time inconsistency in the form of present-bias for both population groups, young smokers are found to discount future utilities much more than adults. From a life-cycle perspective, this is still a form of time inconsistency, which provides partial empirical support to the T21 law motivation, but also highlights how the quasi-hyperbolic discounting formulation might not be able to properly capture long-run time preferences.
Subjects: 
rational addiction
smoking behavior
time inconsistency
young vs adult smokers
GMM
JEL: 
C23
D03
D12
Document Type: 
Working Paper

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