Working Paper: NBER ID: w23820
Authors: Lishiun Chen; Ping Wang; Yao Yao
Abstract: Cigarette smoking leads to large healthcare and morbidity costs, and mortality losses, and smoking cessation plays a key role in reducing health risk and economic costs. While medical evidence suggests that some smokers are more likely to respond to medication treatment than others depending on genetic markers, it remains unexplored whether pharmacogenetic testing is cost-effective in treating potential quitters of smoking. We address this knowledge gap by developing a lifecycle model in which individuals make smoking, health investment and consumption-savings decisions. Depending on an individual's genotype, smoking may bring enjoyment but deteriorates one's health, and the dynamic evolution of health capital determines life expectancy. In addition to heterogeneous genotypes, individuals also differ in demographics. We calibrate this model to fit key economic and medical observations in the U.S. We then propose three smoking cessation policies, two with standard treatments and one personalized depending on genetic markers, all under the same program costs. We construct two unified measures of effectiveness and subsequently compute the cost-effectiveness ratio. We find that personalized treatment is the most cost-effective: for each dollar of program cost, it generates $8.94 value in effectiveness, which is 22-45% higher than those under standard treatments.
Keywords: Smoking cessation; Personalized treatment; Pharmacogenetic testing; Cost-effectiveness; Lifecycle model
JEL Codes: D91; E20; I10
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| high-risk genotype (h3) (I12) | significant impact on smoking cessation success (I12) |
| personalized treatment (C91) | most cost-effective strategy (L21) |
| personalized treatment incorporating pharmacogenetic testing (C91) | higher effectiveness in smoking cessation (I12) |
| personalized treatment (C91) | 22.45% more effective than standard treatments (C90) |
| smoking cessation (I12) | life expectancy (J17) |