Individual cigarette consumption and addiction: a flexible limited dependent variable approach

A variety of limited dependent variable models have been used in microeconometric studies of smoking. We present a general model of the simultaneous decisions of how much to smoke and whether to quit, which allows a more flexible parameterization and distributional assumptions. The model incorporates the fixed costs associated with quitting and allows for the separate influence of addiction on participation and consumption. The model is applied to data on smoking from the 1984-85 UK Health and Lifestyle Survey, and is shown to outperform a range of nested models that have been used extensively in the empirical literature.