Smoking on the shoulders of giants - An application of the two-part model to Swedish longitudinal data

University essay from Lunds universitet/Nationalekonomiska institutionen

Abstract: As the title implies this study builds upon earlier research in the area to obtain an increased understanding of the determinants of smoking. Starting from the household production model (Becker 1965; Grossman 1972), the decisions of smoking participation and intensity of cigarette consumption are estimated in two sets of Two-part Models (2PM). Due to the characteristics of the data – the first three “health waves” of the Swedish Survey of Living Conditions (ULF) – both a dynamic and a static specification of the models are employed. The study finds that irrespective of how addiction is measured, past behavior strongly affects the smoking decisions. Among the other findings, the effect of aging is shown to have a pattern of an inverse u-curve. Moreover, full income does not affect the decisions, whereas experiencing financial stress has a positive effect throughout the models. The negative effects of higher education and having several children living in the household go primarily through the participation decision.

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