The wealth effects of smoking.

OBJECTIVE To investigate the impact of smoking on the wealth of US young baby boomers. METHODOLOGY The research analyses self reported responses of both smoking habits and wealth holdings from a nationally representative sample of US individuals born between 1957 to 1964 (n = 8908). Data are from four waves (1984, 1992, 1994, 1998) of the National Longitudinal Survey of Youth 1979 cohort, a random survey of individuals conducted by the US Department of Labor using a stratified multistage area sample design. RESULTS Regression results show lower net worth is associated with smoking, after holding constant a variety of demographic factors. Respondents who were ever heavy smokers are associated with a reduction in net worth of over 8300 dollars while light smokers are 2000 dollars poorer compared to non-smokers. Beyond this reduction, each adult year of smoking is associated with a decrease in net worth of 410 dollars or almost 4%. CONCLUSIONS While a causal relation cannot be proven, smokers appear to pay for tobacco expenditures out of income that is saved by non-smokers. Hence, reductions in smoking will boost wealth, especially among the poor.