Eric Crampton reports a study on the reasons for smoking. It finds that smokers place a lower value on the cost of getting a major lung disease than non-smokers. I really like to see these sorts of studies because differences in preferences are almost impossible to show without them. It’s easy to SAY that smokers just don’t care as much about their health but, unless you have solid evidence, your argument will usually be dismissed. Economists just don’t really like putting things down to differences in preferences unless they’re really forced to.
Eric points out that
Where advocates of high tobacco taxation often allege hyperbolic discounting by smokers, with taxes then helping smokers to solve self-control issues, this study shows that observed smoking behaviour can be explained without recourse to hyperbolic discounting.
I agree that it might mean that the studies on hyperbolic discounting need to be recalibrated, but I wouldn’t go as far as Eric. There is good experimental evidence that hyperbolic discounting describes normal human behaviour. It is likely to affect people’s decision to smoke and we shouldn’t ignore that just because we now have another reason. Just as explaining smoking without recourse to heterogeneous preferences is missing half the story, so is trying to explain it without hyperbolic discounting. Of course, whether you think that internalities justify taxation is quite another argument.