Education and Health: Where There's Smoke There's an Instrument

54 Pages Posted: 17 Aug 2000 Last revised: 29 Jul 2010

See all articles by William N. Evans

William N. Evans

University of Notre Dame; National Bureau of Economic Research (NBER)

Edward B. Montgomery

University of Maryland; National Bureau of Economic Research (NBER)

Date Written: December 1994

Abstract

Victor Fuchs has suggested that the persistent positive correlation between education and health habits can be explained by interpersonal differences in the discount rate. If Fuchs is correct, some health habits can be used as instruments for education in standard wage equations. We use whether an individual smoked at age 18 in such a fashion. The instrument is strongly correlated with years of education, and IV estimates of the return to schooling are 10 percent larger than the OLS estimates. We fail to reject tests of overidentifying restrictions, show how the smoking/education link varies systematically across age cohorts and income groups, and demonstrate that the instrument is correlated with other intertemporal decisions such as home ownership. The results are replicated in four additional data sets, and for both males and females.

Suggested Citation

Evans, William N. and Montgomery, Edward B., Education and Health: Where There's Smoke There's an Instrument (December 1994). NBER Working Paper No. w4949, Available at SSRN: https://ssrn.com/abstract=226549

William N. Evans (Contact Author)

University of Notre Dame ( email )

913 Flanner Hall
Notre Dame, IN 46530
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574-631-7039 (Phone)

National Bureau of Economic Research (NBER)

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Edward B. Montgomery

University of Maryland ( email )

Department of Economics
College Park, MD 20742
United States
301-405-3498 (Phone)
301-405-3542 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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