Brett Matsumoto (2016) "Lighting the Fires: Explaining Youth Smoking Initiation and Experimentation in the Context of a Rational Addiction Model with Learning"

This paper examines the dynamics of youth smoking behavior using a model of rational addiction with learning. Individuals in the model face uncertainty regarding the parameters that determine their utility from smoking. Through experimentation, individuals learn about how much they enjoy smoking cigarettes as well as the e ects of reinforcement, tolerance, and withdrawal. The addition of learning to the dynamic optimization problem of adolescents provides an explanation for the experimentation of the non-smoker. I estimate the parameters of the model using data from the Na- tional Longitudinal Survey of Youth 1997 and compare the overall t of the model to the model without learning. The estimated model is also used to analyze the e ect of cigarette taxes and anti-smoking policies. I nd that the model with learning is better able to t the observed data and that cigarette taxes are not only e ective in reducing the level of youth smoking, but can even increase welfare for some individuals.