Saturday, June 24, 2006

Cigarette Smoking, Pregnancy, Forward Looking Behavior and Dynamic Inconsistency


Carlo Ciccarelli, Luigi Giamboni and Robert J. Waldmann


We explore the reduction of smoking of women before during and after pregnancy using the European Community Household Panel (ECHP). We use pregnancy as an instrument for a partially predictable future decrease in smoking so we focus on the period immediately before pregnancy. Women reduce the number of cigarettes they smoke and many quit in the period 10 to 15 months before the birth of a child. This is robust statistically significant evidence of forward looking behavior. We find some evidence that suggests that this effect may be stronger for married than for unmarried women, corresponding to the higher probability that the pregnancies of married women are planned. It is possible in principle to use the instrument pregnancy to estimate parameters of a structural model of addiction. We find evidence that cigarettes are highly addictive. Oddly we do not reject the null of perfect predictability of pregnancy, presumably because of the low power of our test. Finally, we find evidence that expected cigarettes smoked one month after the interview is not a sufficient statistic for future smoking. There is borderline statistically significant evidence that expected smoking further in the future has an independent effect. This means that the null of time consistency is (barely) rejected against the alternative of time inconsistency.

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