Why Do Dancers Smoke? Smoking, Time Preference, and Wage Dynamics

Abstract

The discount rate is a key determinant of investments in human capital and occupational choice. Individuals who are less future oriented -i.e. have a higher discount rate -are less likely to invest in human capital and hence more likely to select into careers with lower and flatter earnings profiles. Since an individual's discount rate is unobservable, we use smoking behavior as a proxy to study the role of discounting on wage dynamics. Using data from the National Longitudinal Surveys of Youth (1979-94) we find that smokers, compared to their non-smoker counterparts, earn lower wages at the time they first enter the labor market and experience substantially lower rates of wage growth in the first decade of their careers. These differences in wage dynamics among smokers and non-smokers are consistent with discounting hypothesis, and highly robust to an extensive array of control variables.2 "I'd like to stop smoking. I have smoked for about 15 years. I was a dancer, and all dancers smoke, it's the most bizarre thing", Newark Jan. 1, '98.

Smokers’ Sexual Behavior and Their Satisfaction with Family Life

“…However, some of the control variables seem to correlate with the preference, resulting in estimation bias (Munasinghe and Sicherman 2006). These remaining issues should be addressed in future research.…”

Discounting financial literacy: Time preferences and participation in financial education programs

“…First, our results speak to the presence of selection effects in the evaluation of financial programs. Previous research has found that, in general, more patient individuals have better financial outcomes, since they search longer for a good job (DellaVigna and Paserman, 2005), experience steeper wage growth (Munasinghe and Sicherman, 2006), take up welfare programs earlier (Fang and Silverman, 2006), have higher credit scores, and are less likely to default on their loans (Meier and Sprenger, 2006 The rest of the paper is organized as follows: Section 2 presents the design of the field study and of the choice experiments, Section 3 presents the results, and Section 4 concludes by elaborating on the paper's policy implications.…”

Selection into Financial Literacy Programs: Evidence from a Field Study

“…First, research evaluating the effects of financial programs should take selection effects into account. 2 Previous research has found that, in general, more patient individuals have better financial outcomes, since they search longer for a good job (DellaVigna and Paserman, 2005), experience steeper wage growth (Munasinghe and Sicherman, 2006), take up welfare programs earlier (Fang and Silverman, 2006), have higher credit scores, and are less likely to default on their loans (Meier and Sprenger, 2006). This indicates that patient individuals who acquire financial information are already on the path to better outcomes.…”