Cigarette Smoking and Quitting: A Life-Cycle Approach

We analyze the decisions to take up and quit cigarette smoking with a life-cycle model in which lifetime is uncertain and depends on cigarette consumption. Cigarette smoking increases the current utility of some consumers but it also imposes private costs; the expenditure on cigarettes, the increase in future mortality rates, and the withdrawal cost of quitting. We derive empirical estimates of these costs from data on cigarette prices, income, and the effect of smoking and quitting on mortality rates. We find that the cost of smoking an additional year is quite low at young ages but rises sharply after 35.