Working Paper No. 03-37:
Health Human Capital And The Cost Of Smoking

Author(s):

Richard Ippolito

Date Posted: 2003

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Abstract:

This paper exploits variation in health outcomes among middle age men and women to better understand the "production function" by which cigarette smoking transmits harm. In short, the harm done depends on who does the smoking. Outcome is not randomly determined, but rather varies predictably according to height, own and family education, body weight, and gender, among other things. The results point to the underlying importance of starting stock of good health, its maintenance (for example, through diet), and its depreciation (for example, through smoking). Selection effects are apparent. Smoking is taken up disproportionately by those most likely to incur the greatest harm. And there is a "smoker type" effect, particularly evident in males, who die in alarming numbers compared to smoking females. If cost of hazardous consumption depends importantly on the user's health human capital then models of optimum exposure and the public health guidelines they spawn, need to be reconsidered.