Time Preference, Time Discounting, and Smoking Decisions

Working Paper: NBER ID: w12615

Authors: 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.

Keywords: time preference; time discounting; smoking decisions

JEL Codes: D84; D91; I12

Causal Claims

Cause	Effect
time discount rates (E43)	smoking behavior (I12)
smoking status (I12)	time discount rates (E43)
impulsivity (D91)	smoking behavior (I12)
financial planning horizons (D14)	smoking behavior (I12)
impulsivity (D91)	financial planning horizons (D14)