Learning about individual risk and the decision to smoke

We provide empirical evidence about the process according to which people learn about the risks of cigarette consumption. We formulate a model of individual learning about the risks of smoking through information revealed in the form of health shocks to self and spouse. Exploiting the longitudinal feature of the Health and Retirement Study, we examine how the difference in the qualitative nature of the information about risk, i.e., from personal or non-personal experiences, affects the learning process. Controlling for unobserved heterogeneity, we find that individuals update their subjective survival expectations in response to information from own health shocks, but not as much in response to spousal health shocks. Individuals quit smoking in response to major health shocks but do not respond to spousal health shocks. Taken together, our results imply that individuals learn about smoking risks from their own experiences but not those of their spouses. Our results suggest that regulations, such as direct limits on cigarette consumption (e.g., smoking bans in public places) and excise taxes, are more likely to be effective than antismoking messages, unless these are designed to be highly personalized.