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Rational addictive behavior and cigarette smoking ABSTRACT Cigarette demand equations
accounting for tolerance, reinforcement, and withdrawal are derived using
the Becker-Murphy model of rational addiction and are estimated using
data from the second National Health and Nutrition Examination Survey.
Estimates imply that smoking is addictive, individuals are not myopic,
and price increases would reduce demand. Implications concerning time
preference and addiction are tested by estimating the demand separately
for samples based on age and education. Less educated (younger) individuals
are found to behave more myopically than more educated (older) individuals,
whereas more addicted (myopic) individuals are found to respond more to
price, in the long run, than less addicted (myopic) individuals.
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