A dynamic structural model of health, addiction and smoking
| Dates: | 3 June 2013 |
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| Times: | 14:00 - 15:00 |
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| What is it: | Seminar |
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| Organiser: | Institute of Population Health |
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Host: Centre for Health Economics
Presenter: Eugenio Zucchelli (Lancaster)
Abstract:
This paper proposes a dynamic framework that integrates two important theories of individual behaviour in the economics of health: the rational addiction model of smoking consumption and the human capital model of health investment. We define an individual’s lifetime smoking consumption pattern through a dynamic optimisation problem where smoking is influenced by a series of interconnected factors: the use of preventive medical care, the evolution of an individual’s health endowment and the accumulation of an addiction stock. This inter-temporal optimisation framework leads to a system of four interrelated first-order difference equations (FODE) that we estimate using a GMM three-stage least squares (3SLS) estimator on 18 waves of the British Household Panel Survey (BHPS). Our estimates confirm the persistency of smoking consumption and suggest that past health might play a less significant role in determining current smoking choices.
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