Back to Annual Meeting Page		American Public Health Association 133rd Annual Meeting & Exposition December 10-14, 2005 Philadelphia, PA

Abstract #113342

James W. Shaw, PhD, Tobacco Control Research Branch, Behavioral Research Program, Division of Cancer Control and Population Sciences, National Cancer Institute, 6130 Executive Boulevard, EPN RM 4038 MSC 7337, Bethesda, MD 20892-7337, 215-852-3045, shawjim@mail.nih.gov and William C. Horrace, PhD, Department of Economics, Maxwell School, Syracuse University, 426 Eggers Hall, Syracuse, NY 13244-1020.

While many studies have examined the effect of cigarette smoking on individual or aggregate health expenditures, none have attempted to control for potential endogeneity in these variates. A lifetime of smoking can lead to serious health problems and an increase in expenditures on health; however, it is conceivable individuals may respond to reduced health status by modifying their smoking habits. Without adequately controlling for the latter causal effect in a dynamic setting, estimates of the effect of smoking on health expenditures may suffer from simultaneity bias, causing the true cost of smoking to be inaccurately measured. The authors examined a shard of the tobacco control system model developed for the National Cancer Institute's Initiative on the Study and Implementation of Systems (ISIS). Data from the Michigan Health and Retirement Study (HRS) and other sources were used to estimate a cigarette demand system while controlling for simultaneity in the relationships among smoking, health status, and out-of-pocket health expenditures. The results of this investigation provide evidence for the usefulness of econometric methods when seeking to test the validity of complex system models.

Learning Objectives: At the conclusion of the presentation, participants will be able to

• Develop a conceptual understanding of simultaneous equations methods and their strengths and weaknesses relative to other methods used to study system behaviors.
• Articulate the role that simultaneous equations methods should play in studying complex, dynamic systems.
• Recognize the feedback between health status, healthcare expenditures, and smoking behavior.
• Understand how failure to account for simultaneity can yield biased estimates of the price elasticity of cigarette demand.

Keywords: Smoking, Economic Analysis

Presenting author's disclosure statement:

I wish to disclose that I have NO financial interests or other relationship with the manufactures of commercial products, suppliers of commercial services or commertial supporters WITH THE EXCEPTION OF a Cancer Research Training Award from the National Cancer Institute.