Simultaneous Measurement of Time and Risk Preferences: Stated Preference Discrete Choice Modeling Analysis Depending on Smoking Behavior*

Abstract

Measuring time and risk preferences and relating them to economic behaviors are important topics in behavioral economics. We developed a new method to simultaneously measure the rate of time preference and the coefficient of risk aversion. Analyzing the individual-level relationships between preference parameters and cigarette smoking, we conclude that current smokers are more impatient and risk-prone than nonsmokers. Heavy smokers are the most impatient and risk-prone, whereas ex-smokers are the most patient and risk-averse. Among nonsmokers, neither age-related nor gender-related differences were found. On the other hand, risk and time preferences are significantly different according to age and gender for smokers. Copyright � (2009) by the Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

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