An Econometric Analysis of the Role of Information in Cigarette Addiction

Abstract

The 1964 Surgeon General's Report provoked increased research activity on the topic of cigarette consumption. Recent economic research has viewed cigarette addiction as resulting from conscious, fully informed choices. In the current study, we incorporate findings from the psychology literature. We develop an analytical model of addictive consumption that exhibits results consistent with a theory of alcoholism by Gregory Bateson. We show that unconscious determinants can cause inconsistent consumption decisions and lead to higher than desired consumption. We then develop an empirical model of consumption. In the empirical model, consumption choice is formulated as a hurdle model with an ordered logit participation equation and a censored Poisson consumption equation. We estimate the model using data from the National Household Survey on Drug Abuse (NHSDA) from the years 1991 to 1993. Our empirical results show certain classes of consumers may increase consumption in response to increased information about the hazards of smoking.