Can Economic-Psychological Parameters Account for Smoking Status? : Time Preference, Risk Aversion, and Anomaly

Abstract

This paper investigated smoking status, including nicotine dependence, on the basis of four economic-psychological parameters. Two of them are rational addiction parameters—time preference rate and risk aversion coefficient—and the other two are bounded rational addiction parameters—time consistency index and risk consistency index. The time preference rate is positively associated with smoking probability, while the risk aversion coefficient is negatively associated with smoking probability. At the same time, the time and risk consistency indexes are negatively associated with smoking probability. Although economic-psychological parameters can account for smoking status on the whole, certain exceptions are found with regard to risk preference. These exceptions can be attributed to nicotine dependence.