Working Paper: NBER ID: w30304
Authors: Rong Hai; James J. Heckman
Abstract: We develop and estimate a life-cycle model in a rational addiction framework where youth choose to smoke, attend school, work part-time, and consume while facing borrowing constraints. The model features multiple channels for studying the reciprocal causal effects of addiction and education. Variations in endowments and cigarette prices are sources of identification. We show that education causally reduces smoking. A counterfactual experiment finds that in absence of cigarettes, college attendance rises by three percentage points in the population. A practical alternative of 40% additional excise tax achieves similar results. Impacts vary substantially across persons of different cognitive and non-cognitive abilities.
Keywords: No keywords provided
JEL Codes: H23; I12; I18; I24; I28
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| education (I29) | smoking (L66) |
| cognitive and noncognitive skills (J24) | treatment effects in response to educational interventions (I21) |
| smoking (L66) | educational attainment (I21) |
| education (I29) | college attendance (I23) |
| cigarette addiction (I12) | incentives to invest in human capital (J24) |
| $40 excise tax (H29) | college attendance rate among would-be smokers (I23) |