Smoking, disabilities and health: Their effect on labor market experience

Abstract

Summary The economic cost to society due to cigarette smoking of employed males between the ages of 18 and 65 was $10.25 billion in 1968 which was 1.19% of 1968 GNP. Individual non-white and white male smokers suffered a 8% and 6% decrease in their 1968 labor income. The economic cost of smoking is actually larger, because unemployed male, and unemployed and employed female cigarette smokers of all ages were excluded. Also, the exclusion of non-cigarette smokers underestimates the economic cost of smoking, especially since the effect of non-cigarette smoking is much greater than cigarette smoking. Multicollinearity between smoking and drinking, though, decreases the precision of the estimates of the cost of smoking, but does not necessarily lead to bias in the regression coefficients on SMOKE. In the future, there is need for improvement in the measure of smoking, even though the data used in this study is superior to other data. A more appropriate measure would be a smoking index, which includes depth and length of inhalation, duration of smoking habit, and amount and kind of cigarettes smoked per day. Also, the measure of drinking needs a great deal of improvement. The total cost to society of disabilities to employed males between the ages of 18 and 65 was $9.743 or 1.13% of 1968 GNP. The average individual loss in labor income due to disabilities was 59% and 40% for non-white and white employed disabled workers. The individual cost of disabilities is about four times that of smoking, although the total cost is about the same, because there are so few disabled individuals compared to the number of smokers. The total loss due to disabilites is actually much larger because employed women, and unemployed women and men were excluded, and contrary to smoking, disabilities and labor force participation are significantly and inversely related. Also, to measure more precisely the cost of disabilities, future research should strive to incorporate a measure of disabilities which is not self-reported. Previous authors who used disabilities as a measure of health actually estimated the impact of disabilities instead of health on labor market experience. It has been shown in this study that both health and disabilities have a large independent impact on labor market experience, even though DIS and HEALTH are significantly correlated. Future research should continue to more carefully model and estimate the separate impact of both, because the effectiveness of various types of policy actions which might be initiated to combat the impact of poor health and disabilities depend crucially on the independent effects of both on labor market experience. For instance, disabilities are permanent, so that a retraining program for the newly disabled may be appropriate, while an anti-smoking campaign may be appropriate if an increase in health is desired.