Abstract
This research note presents two economic frameworks to describe the relationship between individual health risk aversion and smoking behavior. Using a large-scale representative data set (GSOEP), direct empirical evidence is found that individuals, who are more health risk taking, are more likely to be smokers and have a higher demand for cigarettes smoked per day. Non-linear specifications of risk taking reveal, however, that the risk effects are only significant for high risk takers. The estimated effects hold also separately for men and women.
Highlights
Smoking behavior has recently been analyzed in many studies (e.g., Chaloupka and Warner, 2000; Goel and Nelson, 2006)
Specification one shows that individuals, who are 0.1 point more health risk taking, are on average 2.6 percentage points more likely to smoke cigarettes and smoke on average approximately 0.4 cigarettes more per day
The second specification shows that individuals, who are 0.1 point more risk taking in health issues than in general, are on average 1.1 percentage point more likely to be a smoker and smoke about 0.18 additional cigarettes
Summary
Smoking behavior has recently been analyzed in many studies (e.g., Chaloupka and Warner, 2000; Goel and Nelson, 2006). The interest arises from the high costs smoking imposes on health care systems. The impact of health risk taking preference has received limited empirical attention and is mostly reduced to the impact of perceived smoking health care risks (e.g., lung cancer, mortality).. I present two simple theoretical frameworks, which describe why risk takers might be more likely to be smokers and might have a higher demand for cigarettes than risk averse individuals, in order to derive the estimation framework (Section 2). The research hypotheses are tested with a large-scale representative data set of German households, which contains information about risk taking preferences as well as smoking behavior (Section 3). The paper concludes with a short summary of the main findings (Section 4)
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