| Both theoretical and empirical analyses were implemented so as to verify the relationship between endogenous time preference and addictive behavior. With simple 2 periods inter-temporal utility maximization model with choice variables of time preference factor, non-addictive and addictive goods, time preference factor is turned out to be one of most important determinants of consumer's addictive behavior. Especially, the theoretical implications show that once a person is addicted, he discounts the future more heavily, and in turn, becomes more addicted. Also, those who discount the future heavily tend to show high sensitivity to cigarette price and those with high time preference rate respond less sensitively to price change.; Using the BRFSS data from 1984 to 2000, cigarette consumption and smoking participation equations with non-addictive, myopic and rational addiction models were estimated. Empirical results suggested that smoking participation in full sample is strongly addictive, but price insensitive, while the intensity of smoking is less addictive, but price sensitive. Especially, education has significant negative effect on cigarette consumption of smokers, but not on smoking participation. For different time preference groups, while the relationships between time preference and the amount of cigarette consumption of smokers are ambiguous, those with low rate of time preference are more addictive in smoking participation and more sensitive to cigarette price compared to the counterpart. |
