JEL D81, D91, I Tel&Fax:

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1 / : JEL D81, D91, I Tel&Fax: ida@econ.kyoto-u.ac.jp 1

2 Interdependency among Addictive Behaviors and Time/Risk Preferences: Discrete Choice Model Analysis of Smoking, Drinking, and Gambling TAKANORI IDA + Graduate School of Economics, Kyoto University, Japan REI GOTO Faculty of Economics, Konan University, Japan Abstract: This paper simultaneously measures the rate of time preference and the coefficient of risk aversion and to investigate the interdependencies of four addictive behaviors: smoking, drinking, pachinko (a popular Japanese form of pinball gambling), and playing the horses. We reach two main conclusions. First, there are significant interdependencies among the four addictive behaviors, in particular between smoking and drinking and between gambling on pachinko and the horses. Second, we conclude that the higher the time preference rate and the lower the risk aversion coefficient, the more likely that individuals smoke, drink frequently, and gamble on pachinko and the horses. Keywords: rate of time preference, coefficient of risk aversion, conjoint analysis, mixed logit model, smoking JEL classifications: D81, D91, I12 + Corresponding author: Takanori Ida, Graduate School of Economics, Kyoto University, Yoshida, Sakyoku, Kyoto , Japan, ida@econ.kyoto-u.ac.jp 2

3 1. (behavioral economics) (addictive behavior) (rational addiction) (bounded rational addiction) 2 (Messinis 1999) (Stigler and Becker 1977, Becker and Murphy 1988) (Winston 1980, Akerlof 1991) (Orphanides and Zervos 1995) (Bernheim and Rangel 2005, Kan 2007)(vertical addiction) (horizontal addiction) (Mitchell 1999, Bickel et al. 1999, Odumu et al. 2002, Baker et al. 2003, Reynolds et al. 2004, Ohmura et al. 2005) (Mitchell 1999, Reynolds et al. 2003, Ohmura et al. 2005) (Madden et al. 1997, Madden et al. 1999) (Petry and Casarella 1999, Petry 2001, Alessi and Petry 2003) (Petry and Casarella 1999, Petry 2001, Alessi and Petry 2003) 3

4 2 / / (Raclin and Siegel 1994) / (Rachlin et al. 1991, Keren and Roelofsma 1995, Anderhub et al. 2001, Yi et al. 2006) (Discrete Choice Experiment, DCE) (Mixed Logit, ML) / / (Barsky et al. 1997) 4 / 2 4 2/ 2 3 / DCE( ) ML

5 ( 22 ) Web 1, ,022 / DCE 692( 67.7%) 35% < 1> FROM TO =76.2% 76.2% 1 ( 74.1%) < 2> 3. / 3.1 DCE( ) 5

6 / 692 DCE( ) DCE ( ) % % 60% 80% 90% j V j ( j j j ) 1,2 1 Samuelson (1937) Koopmans (1960) Fishburn and Rubinstein (1982) 6

7 exp(time j ) j j j V j V j ( j j j ) =exp(time j ) j j -TIME RISK 1-RISK lnv j ( j j j ) =TIME j +ln j +RISK ln j -TIME 1- RISK (Frederick, Lowenstein, and O'Donoghue 2002) (Kahneman and Tversky 1979) (Takahashi 2005) 3.3 (Independently and Identically Distributed, IID) (Conditional Von Neumann and Morgenstern (1953) 2 j j=1,,j : j=1,,j j ( j ) 7

8 Logit, CL) CL IID Independence of Irrelevance Alternatives, IIA IIA (Mixed Logit, ML) 3 ML (McFadden and Train 2000) ML CL Train 2003, Louviere et al CL L ni n i V ni J L ni ( ) = exp(v ni ( )) / J j=1 exp(v nj ( )) ML f ( ) J P ni = exp(v ni ( )) / exp(v nj ( )) j=1 f ( )d Linear-in-Parameter j x ni z ni ni IID U ni = ' x ni + ' z ni + ni ML f ( ) r R f ( ) r r L ni ( ) R ˆ r Pni = 1/ R Lni ( ) P ni (Simulated Log Likelihood, SLL) d ni r= 1 3 ML Random Parameter Error Components (Revelt and Train 1998, Brownstone and Train 1999) 8

9 SLL= N J n=1 j= 1 d ni ln Pˆ ML (Bayes' Theorem) (Revelt and Train 2000) n y n h( y n ) = P(y n ) f ( )/ nj P(y n ) f ( )d ML Maximum Simulated Likelihood ML TIME -TIME RISK (1-RISK) ML 3 TIME t t 4 (Halton sequence) 100 (Halton 1960, Bhat 2001, Train 2003) 9

10 RISK t t < 3> (a) 4(b) 4(c) t < 4> 2 ML ML (Revelt and Train 2000) 2 < 2> (Mitchell 1999 Bickel et al Odum et al Baker et al Reynolds et al Ohmura et al. 2005)

11 (Mitchell 1999 Reynolds et al Ohmura et al. 2005) (a) 5(b) 5(c) t < 5> 2 Fuchs (1982) 11

12 ( ) 4 Nelson and Olson (1978) 2 ()( ) ( ) 2 (Simultaneous Probit System) K Y * ki = kj Y * ji + k X i + ki, k = 1,,K (1) k =1 k k Y * ki = k X i + ki, k = 1,, K (2) Y ki = 1 if Y * ki > 0 (3) 0 if Y * ki 0 * Y ki i k Y ki 1 0 X i kj k k i = ( 1i,, Ki ) i = ( 1i,, Ki ) K N(0, ) 12

13 (1)(2) 2 1. (2) K k ˆ Y ki * = ˆ k X i 2. (1)Y ji * ˆ Y ki * (1) 6 2 Evans et al. (1992), Evans et al. (1995), Brooks et al. (1998) < 6> ( ) 6 2 (Murphy, K.M. and R.H.Topel 1985) 13

14 % 0.175% 1% 1.027% < 3> 14

15 < 7> / 5. / 15

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A quasi-hyperbolic discounting approach to smoking behavior

Ida Health Economics Review 2014, 4:5 RESEARCH Open Access A quasi-hyperbolic discounting approach to smoking behavior Takanori Ida Abstract Addiction has attracted considerable attention in health and