GCOE Discussion Paper Series
Global COE Program

Human Behavior and Socioeconomic Dynamics
Discussion Paper No.224

Smokers, Smoking Deprivation, and Time Discounting

Shoko Yamane, Hiroyasu Yoneda, Taiki Takahashi, Yoshio Kamijo,
Yasuhiro Komori, Fumihiko Hiruma and Yoshiro Tsutsui

November 2011

GCOE Secretariat
Graduate School of Economics

OSAKA UNIVERSITY

1-7 Machikaneyama, Toyonaka, Osaka, 560-0043, Japan

Smokers, Smoking Deprivation, and Time Discounting∗Shoko Yamane A
Hiroyasu Yoneda B
Taiki TakahashiC
Yoshio Kamijo D
Yasuhiro KomoriE
Fumihiko Hiruma F
Yoshiro TsutsuiG∗

We gratefully acknowledge insightful comments by Noah Smith.
Shoko Yamane, MA; Graduate School of Economics, Osaka University; 1-7, Machikaneyama,
Toyonaka 560-0043 Japan; Phone +8190-1950-3909 ;e-mail hgp011ys@mail2.econ.osaka-u.ac.jp
B
Hiroyasu Yoneda, Ph.D.; Institute of Social and Economic Research, Osaka University; 6-1
Mihogaoka, Ibaraki, Osaka 567-0047; phone +81-6-6879-8552;
fax +81-6-6879-8584; e-mail yoneda-h@econ.osaka-u.ac.jp
C
Taiki Takahashi, Ph.D.; Center for Experimental Research in Social Sciences Department of
Behavioral Science, Hokkaido University; N.10, W.7, Kita-ku, Sapporo, 060-0810 Japan; phone+81-11-706-3057; fax +81-11-706-3066;e-mail ttakahashi@lynx.let.hokudai.ac.jp
DYoshio Kamijo, Ph.D.; Waseda Institute for Advanced Study, Waseda University; 1-6-1
Nishiwaseda, Shinjukuku, Tokyo 169-8050 Japan; phone +81-3-5286-2103; e-mailyoshio.kamijo@gmail.com
E
Yasuhiro Komori, MA; 5-43-4 Minamisenju, Arakawaku, Tokyo 116-0003 Japan, phone+81-3-3801-6002; e-mail yasuhiro.komori@gmail.com
F
Fumihiko Hiruma, MA; School of Commerce, Waseda University; 1-6-1 Nishiwaseda
Shinjuku-ku Tokyo 169-8050 Japan; phone +81-3-5286-2014;
e-mail hiruma@waseda.jp
G
Corresponding author, Yoshiro Tsutsui, Ph.D.; Graduate School of Economics, Osaka
University; 1-7, Machikaneyama, Toyonaka 560-0043 Japan; Phone +81-6-6850-5223; Fax+81-6850-5274; e-mail tsutsui@econ.osaka-u.ac.jp
A1

Abstract
This paper investigates whether smokers exhibit greater time discounting thannon-smokers, and how short-term nicotine deprivation affects time discounting. A
unique feature of our experiment is that our subjects receive rewards not only of money,
but also of actual tobacco. This is done in order to elicit smokers’ true preferences.
Smokers are more impatient than non-smokers, consistent with previous studies.
Additionally, nicotine deprivation makes smokers even more impatient. These results
suggest that nicotine concentration has different effects on time preferences in the shortand long runs.

JEL Classifications: D03, D90, I10, Q57
Keywords: time discounting, nicotine concentration, smoking deprivation, panel logit
analysis, economic experiment2

1. Introduction
It is well-established that smokers are more impatient than non-smokers (Brick et al.
1999, Mitchell 1999, Baker et al. 2003, Ohmura et al. 2005, Reynolds 2004, Reynolds
et al. 2004, 2007).1 Experiments using animals suggest that this is due to a chronic (butnot acute) increase in nicotine concentration (Dallery and Locey 2005, Tsutsui-Kimura
et al. 2010).2
The purpose of this study is twofold. We first seek to confirm the result thatsmokers display greater time discounting than non-smokers. We then investigate theshort-term effects of nicotine deprivation on time discounting.
If time discounting simply corresponds to the concentration of nicotine in aperson’s body, a short-term deprivation of nicotine should reduce a person’s time
discount rate, by reducing this concentration. Indeed, Dallery and Locey (2005) reportthat an increase in impulsiveness induced by chronic nicotine administration isreversible in rats. However, casual observation suggests that smokers become more
irritated and impatient when they abstain from smoking for a while. Several studies
support this intuition. An experiment by Sayette et al. (2005) finds that the urge to

1

However, Khwaja et al. (2007), based on survey results, report that there are no significant
differences in revealed rates of time discounting between smokers and non-smokers.
2
Note that there exists reverse causality, in that the time discount rate significantly affects an
individual’s decision to start smoking (Sato and Ohkusa, 2003).
3

smoke may affect time perception, and that smokers who crave nicotine overpredict the
duration and intensity of their own future smoking urges. Using opioids rather than
tobacco, Badger et al. (2007) find that heroin addicts value an extra dose of the heroin
substitute Buprenorphine more highly when they are currently craving than when they
are currently satiated. Similarly, Giordano et al. (2002) find that the degree of
discounting was significantly higher when subjects are opioid-deprived, and conclude
that opioid deprivation increases the degree to which dependent individuals discountdelayed heroin and money. These studies suggest a negative rather than a positive
relationship between time discounting and the concentration of a drug in an addict’s
body.
Examining the relation between nicotine deprivation and impatience, Mitchell(2004) and Field et al. (2006) report that deprivation makes subjects more impulsive.
However, comparing one-day and 14-day abstinence groups, Yoon et al. (2009) find no
significant difference in time discounting tasks. Using a three-hour deprivation period,
Dallery and Raiff (2007) report no significant differences in time discounting between
active nicotine patch and placebo patch groups. Although these results are notconclusive, they suggest that the long-term and short-term effects of nicotine
deprivation on impatience may differ. To resolve this puzzle, we propose that when a4

non-smoker starts smoking, the long-term increase in nicotine concentration makes her
more impatient in general, but a decrease in nicotine concentration due to a brief
cessation of smoking makes her even more impatient for the duration of deprivation. 3
To explore both the long- and short-term effects of nicotine addiction, we conduct
an experiment comparing time discounting between smokers and non-smokers, as well
as between deprived smokers and non-deprived smokers. The salient difference of ourexperiments from previous studies such as Mitchell (2004) and Field et al. (2006) is that
our subjects are asked to choose between receiving nicotine earlier and receiving
nicotine later. In contrast, Mitchell (2004) asks her subjects to choose between receiving
a number of cigarettes (up to 60) and US$10 immediately, or receiving a larger amountof money in the future (up to 365 days). This task does not give subjects the opportunity
to choose the time at which they will be allowed to smoke. In addition, the 60 cigarettes
are not all smoked at the time they are received, leaving some ambiguity in the timingof the nicotine receipt. Thus, subjects facing this cigarette-money tradeoff should show
3

Several studies investigate what kinds of people more easily abstain from smoking. For
example, Krishnan-Sarin et al. (2007) study thirty adolescent smokers, who participated in ahigh school based smoking cessation program; sixteen participants (53%) were abstinent fromsmoking at the completion of the four-week study. Compared to abstinent adolescents, those notachieving abstinence discounted monetary rewards more. Thus, it may be the case that more
impulsive adolescents were unable to achieve abstinence. Dallery and Raiff (2007) report thatthose who had higher time discounting tended to choose smoking more often than money,suggesting that they had more difficulty abstaining. Conducting a five-month follow-up surveyof 608 Japanese adults who had just begun smoking cessation, Ida et al. (2011) found thatcessation successes are more risk averse than cessation failures, and that time preference rates
decrease for cessation successes and increase for cessation failures.
5the same rate of time preference as if both alternatives were purely monetary (since they
presumably assign a fixed monetary value to the immediate receipt of 60 cigarettes).
Surprisingly, however, Mitchell finds that nicotine-deprived subjects become more
impulsive in a cigarette-money session, but not in a money-money session, suggestingthat the framing of the choice has some impact on the intertemporal decisions of her
subjects.
Field et al. (2006) ask subjects in their money-money task to choose between
fixed amounts of money (₤500) received later vs. some amount of money received
immediately. The delay is set at either 1 week, 2 weeks, 1 month, 6 months, 1 year, 5
years, or 25 years. The subjects in their cigarette-cigarette task are asked to choose
between amounts of cigarettes that correspond to the monetary rewards in themoney-money task. 4 They find that nicotine-deprived participants show more
pronounced delay discounting in both tasks. However, our critique of Mitchell (2004)
applies to Field et al. (2006) as well; we doubt that either the “cigarette-money task” inMitchell (2004) or the “cigarette-cigarette task” in Field et al. (2006) is the best way toelicit preferences on smoking. In our experiment, in contrast, subjects choose both theamount and the timing of their smoking reward. Our experiment is unique in that we₤500 corresponds to 100 packs, where one pack contains 20 cigarettes. The rewards arehypothetical in Field et al. (2006), and are not actually paid to the subjects.
46

pay actual rewards not only in the “money session,” but also in the “tobacco session”; atthe end of the experiment, subjects actually smoke according to their choices earlier inthe session. 5 We do this because we believe that precision in the specification of
incentives is crucial to the accurate elicitation of preferences, especially in the case ofsmoking.
It is known that people have different discount rates for different consumed goods;
these differences are called “domain effects” (Frederick et al., 2002; Odum andBaumann, 2007). In our case, deprived smokers may be highly impatient with regards totobacco, but more patient with regards to other goods such as money.
The rest of the paper proceeds as follows. In the next section, we explain our
experimental design. In section 3, we present the preliminary results of the experiments.
In section 4, we explain the main results of our panel logit estimation. Section 5
concludes.

2. Experimental design
2.1

Basic setup

Our subjects consist of three groups: non-smokers, smokers who smoked as usual on the5

Yoon et al. (2009) conduct a choice task involving real money and cigarettes; however,subjects are requested to choose between one puff now and $0.25 now, so that their task is not
an intertemporal choice.
7

day of the experiment, and smokers who were deprived of smoking for 12 hours before
the beginning of the experiment. Subjects who comprised the “usual smoker group” on
the first day became members of the “deprived smoker group” on the second day, andvice versa. 6
Subjects were requested to choose one of two options, A or B, displayed on acomputer in front of each subject. 7 Those who chose option A received a smaller
reward earlier, and those who chose option B received a larger reward later.
We varied four variables over our treatment groups: 1) the size of the reward in
option A, 2) the “delay,” 3) the “interval,” and 4) the “rate of return.” The “delay” isdefined as the difference between the time at which the option is chosen (t=0) and thetime at which option A is received. The “interval” is defined as the difference between
the times at which options A and B are received. The “rate of return” is defined as theamount of reward in option B minus the amount in option A, divided by the interval.

2.2

Hypothetical tobacco, money, and real tobacco sessions

The experiment consisted of three sessions: the “hypothetical tobacco,” “money,” and“real tobacco” sessions.
6

Using the same subjects in the two sessions enabled within-subjects comparisons between
deprived and non-deprived conditions.
7
The experiment was carried out using the software Hot Soup Play.
8

Real tobacco session:
We begin with the explanation of the real tobacco session, as this is, to our knowledge,
the first time such a choice has been offered to experimental subjects. The rationale
behind using real tobacco is that the desire to smoke is an instinctive rather than arational motivation, so that the belief that rewards will actually be paid (i.e. that subjects
will be able to smoke) is necessary to elicit true preferences. Thus, we set up theexperiment so that each subject would smoke a specified amount at the exact time
specified in the option she selected.
We used five values for the delay; 32, 29, 26, 23, and 20 minutes. The interval
was fixed at 30 minutes. The real tobacco session was divided into five blocks; in eachblock, 16 questions were asked. Subjects had 3 minutes to answer the 16 questions in a
block. The delay was fixed in each block: e.g. 32 minutes in the first block, 29 minutes
in the second block and so on. Therefore, those who chose the earlier option in aparticular “tobacco” question all smoked at the same time, i.e. 20 minutes from the time
the last question was answered. Those who chose the later option smoked 50 minutes
from the time the last question was answered, since the interval was set at 30 minutes.
The tobacco reward took one of six possible values: one puff, two puffs, a half
cigarette, one cigarette, one and a half cigarettes, and two cigarettes. After some9

preliminary trials, it was decided that eight puffs was equivalent to smoking one
cigarette.
Ten rates of return were used; 0, 33.3, 50, 100, 200, 300, 500, 700, 1100, and 1500(%) for a 30-minute interval. Using these parameter values, 16 questions were asked foreach delay, so that 80 questions were asked in total in the real tobacco session (Table 1).
Hypothetical tobacco session:
Although our real tobacco session was able to elicit the subjects’ preferences over the
given time horizon of 50 minutes, longer time periods could not be explored. To ask
questions concerning longer delays and intervals, we added a “hypothetical tobacco
session,” in which subjects did not actually smoke at the end of the experiment.
In this session, the hypothetical smoking rewards were the same as those in thereal tobacco session. The five delays were zero, one hour, three hours, 12 hours, and 24
hours. The interval was fixed at 12 hours. The ratios of the rates of return were the sameas those of the real tobacco session, relative to the interval. Based on these conditions,
16 questions were asked for each delay, so that 80 questions were asked in total in the
hypothetical tobacco session (Table 1).
Money session:

10

The money session had three possible rewards; 1000, 2000, and 3000 yen. 8 Five delays
were considered: today, one week, two weeks, three weeks, and four weeks. Theinterval was fixed at two weeks. Six different annualized rates of returns were chosen: 0,
50, 100, 150, 200, and 300 (%). Based on these conditions, 16 questions were asked foreach delay, so that a total of 80 questions were asked in the money session (Table 2).
At the end of the experiment, one question was randomly selected out of 80questions for the money and real tobacco sessions respectively, and subjects received areward (both money and smoking), based on their choice in the selected question, at thetime stated in the chosen option. Smokers in both the “usual” and “deprived” smoking
groups earned an average of ¥4,450 for two days, and non-smokers, who attended only
the money session on one day, earned ¥1,923. In addition, smokers and non-smokers
were paid ¥6,666 (for two days) and ¥2,222, respectively, in cash as compensation forparticipation, so that total per-capita rewards were ¥11,116 for smokers and ¥4,145 fornon-smokers.

2.3

Flow of the experiment

After the instructions were read, the hypothetical tobacco session, money session, and8

At this time the exchange rate was about $1=¥90 or ¥91.
11

real tobacco sessions were conducted in that order. Only the usual smoker group wasallowed to smoke during the breaks between the sessions. The real tobacco session was
divided into five blocks, each of which involved 16 questions in three minutes. Aftereach real tobacco session finished, one of the 80 questions was randomly selected, andeach subject smoked the amount of tobacco at the time designated in her chosen option
in the selected question. During this 50-minute smoking time, subjects answered aquestionnaire and were paid the show-up fee. 9 After all the subjects smoked, theywaited for 30 minutes in the laboratory, during which time they were allowed to do
anything other than smoke (if applicable). This 30-minute prohibition of smoking wasannounced in the instructions at the beginning of the experiment, before subjects madetheir choices. This was done to assure that subjects did not smoke on their own
immediately after leaving the experiment, since this opportunity would distort theirintertemporal choice. 10

2.4

Implementation of the experiment

The experiment was conducted on January 12-14 (first wave) and February 20-21

9

Most of the rewards in the money session, except for the ones received immediately, were
paid later at the specified times by bank transfer.
10
In the hypothetical tobacco session, we asked the subjects to “suppose you were unable tosmoke for 24 hours after the experiment” when they made their choices.
12

(second wave), 2010 at Osaka University, Japan. The subjects consisted of 50 smokers(male=49, female=1) and 17 non-smokers (male=13, female=4). 11 All of thenon-smokers were in the first wave. Of the smokers, 14 subjects (all male) were in thefirst wave and the rest of the subjects, 36 (male=35, female=1) were in the second waveof the experiment.

3.

Preliminary results

3.1

Compliance with the no-smoking requirement

We asked the subjects of the deprived smoker group to stop smoking 12 hours prior to
the beginning of the experiment. 12 In order to verify that this was done, we gave thesesubjects a breath test and checked the CO concentration of their exhalations, using a“smokerlyzer” tool produced by Bedfont Scientific Ltd. The tool provides two measuresof the likelihood of recent smoking; PPM (Parts Per Million) of CO in the lungs,
and %COHb (percent of carboxyhemoglobin) in the blood.
The mean of PPM among the deprived smokers was 3.24, while that of the usual
smokers was 8.20, so that the deprived smokers showed significantly lower PPM (t(98)= 4.74, p < 0.000). The deprived smokers had 1.04 %COHb on average, while the usual

1112

Mitchel (2004) uses only eleven smokers. Field et al. (2006) use 30 smokers.
The experiments began at either 10 am or 1 pm.
13smokers had 1.86, so that again the deprived smokers showed significantly lower
smoking activity by this measure (t(98) = 4.53, p < 0.000). These results indicate thatthe 12-hour injunction against smoking was generally obeyed. Inspection of theindividual records revealed that all the subjects who showed high nicotine
concentrations under the usual smoking condition show a large decline in concentrationlevels when deprived.

3.2

Effectiveness of the 12-hour nicotine deprivation period

It is important that the 12-hour nicotine deprivation period be long enough to strengthen
the subjects’ desire to smoke. 13 In order to verify this, we asked the following question
four times during the experiment ((1) just after the start of the experiment, (2) just after
the hypothetical tobacco session, (3) just after the money session, and (4) just after thereal tobacco session):
Question: How strongly do you want to smoke now? Please rate your desire from 1 (Ido not want to smoke now) to 10 (I do want very much to smoke now).
The result is shown in Figure 1. The deprived group reported significantly higher
desire to smoke than the usual smoker group ((1): t(98) = -6.16, p = 0.000, (2): t(98) =13

Mitchel (2004) asked her subjects to stop smoking for 24 hours; Field et al. (2006) 13 hours;
and Dallery and Raiff (2007) 3 hours.
14-4.97, p = 0.000, (3): t(98) = -7.17, p = 0.000, (4): t(98) = -7.10, p = 0.000). Also, while
the smoking desire reported by the usual smoker group does not show an upward trend
over the course of the experiment, that of the deprived group does. This is to be
expected, because the usual smoker group is allowed to smoke during the breaks
between the sessions, while the deprived group is not.
We also asked the subjects the following question at the end of the experiment.
Question: Suppose that you were not allowed to smoke at all for 24 hours, starting
now. How much would you pay in order to smoke one cigarette now?
The average answer of usual smokers was ¥116.4, while that of deprived smokers
was ¥210.8. Again these two groups’ smoking appetites differed during the experiment,
although the difference is not statistically significant at the 5% level (t(70)=-1.67,
p=0.100).

3.3

Average choices of the subject groups

First, we report the number of rounds in which non-smokers, usual smokers, anddeprived smokers, respectively, chose the later option. We code the choice as a dummy
variable that equals 1 if option B (the later option) is chosen, and 0 otherwise. The
results are shown in Figure 2. The vertical axis in the figure gives the mean of this15

variable for each group.
From this figure it is apparent that non-smokers tend to choose the later option.
The difference in the mean between all smokers and non-smokers is significant (t(9358) =8.792, p=0.000).
Although the difference between deprived smokers and usual smokers is small insize, it is significant at the 5% level in the real tobacco session (t(7998)=2.142,
p=0.032). However, it is not significant in the hypothetical tobacco session(t(7998)=-0.631, p=0.528) and “money session” (t(7998)= -0.761, p=0.447). This
simple analysis suggests that deprived smokers are more impatient than usual smokers
when it comes to choices involving actual tobacco.

4.

Panel logit analysis

4.1

Estimation method

To quantify time discounting for the three groups, we estimate a panel logit model,
where the dependent variable is a choice dummy that takes a value of unity if a subject
chooses a later option and zero if she chooses an earlier option. An alternative method
would have been to first estimate separately the time discount rates for each treatmentgroup specified by the delay, the interval, and the amount of rewards, and then to16compare these. However, the method we use has the advantage of efficient use of all theinformation contained in the 240 total choices made by the subjects. More importantly,
the two-step method assumes that each subject makes all decisions based only on her
personal constant per-period time discount rate, an assumption that has been foundquestionable by a number of studies (Frederick et al. 2002, Kirby et al. 1995, Benzion etal. 1989, Loewenstein et al. 1992); our method requires no such assumption.
Other studies have adopted approaches that differ than ours. Previous studies suchas Bickel et al. (1999), Reynolds (2004), Dallery and Raiff (2007), and Ohmura et al.
(2005) estimate hyperbolic discounting functions. Field et al. (2006) use area under the
curve (AUC), first proposed by Myerson et al. (2001), to measure time discounting.
However, we have reasons for not using either of these approaches. Evaluation of thedegree of hyperbolic discounting by estimation of the hyperbolic function is limited inthat it assumes a specific functional form. AUC does not; however, calculating AUC foreach subject at the first stage, and then comparing AUCs between smokers andnon-smokers, sacrifices efficiency compared to the full-information method that we use.
It is believed that intertemporal choice is affected by the delay, the interval, andthe magnitude of the reward (Kinari et al. 2009). Therefore, our explanatory variables
are the rate of return (RETURN), the delay (DELAY), and the amount of reward

17

(AMOUNT). 14 We also include a dummy variable for whether a subject is a smoker(D_SMOKER) for the analysis of smokers vs. non-smokers, i.e. the estimation using thedata of the “money session.” If the coefficient on this dummy is negative, it implies thatsmokers tend to choose later options, and are therefore less patient.
On the other hand, in the analysis of deprivation, the key variable measuring theeffect of short-term nicotine deprivation is a dummy variable for deprived smokers(D_DEPRIVATION). All the data obtained in the three sessions are used for the analysis
of deprivation. 15 Explanations of all variables used in the regression analysis are givenin the Appendix.

4.2

Smokers vs. non-smokers

The results of the estimation for smokers vs. non-smokers are presented in Table 3. The
total number of observations is 5360. Only in the “money session” do we compare
smokers with non-smokers. The left-most columns of the table show the coefficients on
DELAY and AMOUNT. The coefficient on the smoker dummy is significantly negative,
implying that smokers are more impatient than non-smokers. Although the coefficient
14

The interval is fixed in each session, so that its effect is included in the constant term.
Although smokers are also compared with non-smokers in the money session, only the
results for deprived vs. non-deprived smokers are used in the analysis of deprivation.

15

18

on AMOUNT is significantly positive, implying that subjects become more patient forlarge rewards (the magnitude effect), the coefficient on the DELAY variable is not
significant. Thus, we see no delay effect in this regression specification.
In the middle columns, the results for the delay and amount dummies are shown.
The dummy variables representing whether the reward was given today (D_DELAY_M1,
where “M1” represents the money session) and whether the amount was ¥1,000(D_AMOUNT_M1) are omitted for the benchmark specification. Again, the coefficienton D_SMOKER is significantly negative, confirming that smokers are more impatient.
The amount dummies are significantly positive, and the coefficient on the dummy
representing¥3,000(D_AMOUNT_M3)

islarger

than

that

for

¥2,000(D_AMOUNT_M2), confirming the existence of magnitude effects over the entire rangeof rewards. The delay dummies representing one and two weeks later (D_DELAY_M2
and D_DELAY_M3) are significantly positive at the 1% level, while those for three andfour weeks later (D_DELAY_M4 and D_DELAY_M5) are only significant at the 5%
level, with smaller point estimates, so that delay effect can only be unambiguously
observed over periods of one or two weeks. 16 This last result is consistent with Kinari
et al. (2009) and Sasaki et al. (2011).

16This may be the reason why no delay effect is found when the delay variable itself is used asa regressor instead of these dummies.
19

The right-hand columns of Table 3 show the results when dummies for thedifferent rates of return are used as regressors instead of the return variable itself. The
coefficients on the return dummies are significantly positive, and are larger for larger
returns, confirming that subjects’ choices were rational with respect to returns. The
coefficients on the delay and amount dummies are similar in size to the corresponding
coefficients in the previous regression.

4.3

Effects of smoking deprivation

In the upper panel of Table 4, we present the results for the effect of nicotine deprivation
for all three sessions, using DELAY, AMOUNT, and RETURN as explanatory variables
in addition to a dummy for the deprived smoker group. The smoking deprivation
dummy is significant only for the real tobacco session. The coefficient on the dummy
variable is negative, implying that smoking deprivation makes subjects more impatient.
In the hypothetical tobacco and money sessions, the dummy variable is not significant.
These results suggest that subjects reveal their true smoking preferences only when
incentives are appropriate; i.e., when the smoking reward is real.
The coefficient on the delay differs over the three sessions. It is significantly
negative in the real tobacco session, implying that the subjects become more impatient

20with respect to smoking as the delay becomes longer. This is the opposite of the typicaldelay effect. In the money session, the coefficient on the delay is significantly positive,
showing the usual delay effect. In the hypothetical tobacco session, the coefficient is not
significant.
The coefficient on the amount of reward is significantly positive in the money
session, implying the usual magnitude effect; subjects become more patient when theamount of reward is large. However, in the real and hypothetical tobacco sessions, theeffect is reversed; when the reward is larger, subjects are less patient.
The coefficient on the rate of return is positive in all sessions, indicating that
subjects are rational with respect to rates of return.
When dummies for the delay and amount are used as regressors instead of the raw
variables, the results are essentially unchanged (Table 4, lower panel). The smoking
deprivation dummy is significant only in the real tobacco session. For the return
variable, we do not use dummies; this is in order to avoid the dummy variable trap, as
the return dummies are linearly dependent with the delay and amount dummies in thereal and hypothetical tobacco sessions. The return variable is positive and significant inall sessions, as shown in the upper panel of the table. 17

17

For the money session, we also estimate an equation including all return dummies (the results
21

The usual delay effect is only observed in the money session, as shown in theupper panel. However, we find that the delay effect only operates over one week. In thereal and hypothetical tobacco sessions, the coefficients on the delay dummies arenegative, implying that the opposite of the usual delay effect is found for some delays(shown in the upper panel).
For the magnitude effect, the coefficients of the amount dummies in the money
session are positive and increasing in the amount, again confirming the usual magnitude
effect. In the real and hypothetical tobacco sessions, the coefficients of the dummies on
two puffs and half a cigarette are significantly positive, while those for larger amounts
are significantly negative, suggesting that the amount of smoking has a nonlinear andcomplex effect on the choice.
In sum, nicotine deprivation makes subjects more impatient with regards tosmoking, but not to money. The delays and amount of rewards matter for intertemporalchoices, but differ depending on whether the choice is over tobacco or money. Thus, wefind a domain effect for time discounting.

are omitted to save space). All the coefficients on the dummies are significantly positive andincreasing in the amount. Thus, rationality of subjects’ choices with respect to returns is again
confirmed. The delay and magnitude effects are unchanged from those in the upper panel.

22

4.4

Robustness check

Our subjects consist of both light and heavy smokers. Figure 3 presents a histogram of
the number of cigarettes that the subjects smoke per day, which ranges from 1.5 to 25
cigarettes with a mode of ten cigarettes. In the previous subsection, we found thatshort-term deprivation makes subjects impatient in the real tobacco session. Thistendency should be stronger for heavy smokers and weaker for light smokers. Thus, as arobustness check, we separate our 50 smokers into “heavy smoker” and “light smoker”
groups, and measure the difference between the two.
It seems natural to separate the groups at the mode of ten cigarettes. In one
specification (specification (a)), the light smoker group consists of those who smoke
less than or equal to ten cigarettes (31 subjects) and the heavy smoker group consists of
the other 17 subjects; in specification (b), the light smoker group consists of those who
smoke less than ten cigarettes (17 subjects) and the heavy smoker group consists of theremaining 31 subjects. 18
The results for specification (a) are presented in the upper panel of Table 5. In thereal tobacco session, although the deprivation dummy is significantly negative for the

The number of observations is smaller than 50 because those who chose only A or only B are
excluded.
18

23

heavy smoker group, it is not significant for the light smoker group. 19 The coefficienton the deprivation dummy for the heavy smoker group is larger in absolute value thanfor the whole sample.
In the lower panel, the results of separation (b) are presented. They are essentiallythe same, confirming our hypothesis. In addition, the heavy smoker group becomessignificantly impatient when deprived, even in the hypothetical tobacco session. Thisrobustness check strongly suggests that the results of the previous section have captured
a real effect.

5.

Conclusions

In this paper, we investigated whether smokers show higher time discounting thannon-smokers, and how short-term nicotine deprivation affects time discounting. A
unique feature of our experiment is to offer subjects a choice between two smoking
options, and to give rewards to subjects according to their choices not only in the money
session, but also in the tobacco session, in order to measure domain effects on
preferences by eliciting their true preference on nicotine.

19

When amount dummies and delay dummies are used as regressors instead of thecorresponding variables, similar results are obtained. The results for the money session are notpresented, since the estimation routine did not converge.
24

We unequivocally confirmed that smokers are more impatient than non-smokers
in the money, hypothetical tobacco, and real tobacco sessions, which is consistent withprevious studies. On the other hand, short-term nicotine deprivation makes smokers
even more impatient. This latter result is obtained only in the real tobacco session,
where subjects actually consume their tobacco rewards at the specified time. Thissuggests that giving appropriate incentives is crucial for the elicitation of true
preferences when smoking is involved. When the sample is restricted to heavy smokers,
the effect is even stronger.
Overall, these results suggest that nicotine concentration has different effects inthe short-run than in the long-run; although long-term intake of nicotine, which implies
higher nicotine concentrations over time, makes people more impatient, short-term
nicotine deprivation, which causes a lower nicotine concentration, makes smokers evenmore impatient. In other words, nicotine intake has different effects on the time
preferences of addicted and non-addicted subjects. 20 Investigation of the neurologicalbasis for these effects remains as a target for future research.

20

However, an alternative hypothesis exists. Long-term smokers may simply experience therepeated frequent occurrence of short-term deprivation, and thus become impatient. In this case,the long-term and short-term effects of nicotine would be due to the same phenomenon.

25

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29

Table 1

amount(A)1puff

Questions in real tobacco and hypothetical tobacco sessions
Rate of return

0%

33.3%

50%

１ puff

100%

200%

300%

500%

2 puffs

0.5

2 puffs

0.5

1

0.5

1

1
1.5

1.5

1.5

700%
1

1.5

1100%

1500%

1.5

2

2

2

2

2

Note: The amounts of the rewards corresponding to option B are shown in each cell. Each number represents a number of cigarettes,
unless otherwise mentioned. The length of the period used to determine rates of return is 30 minutes in the real tobacco session and
12 hours in the hypothetical tobacco session.

30

Table 2amount(A)
1000
2000
3000

Sixteen questions asked for each delay in money session

0%
1000

50%
1019
2039
3058

Rate of return (annual)
100%
150%
200%
1039
1058
1077
2077
2116
2154
3116
3174
3231

300%
1116
2231
3347

Note: The amount of rewards (yen) in option B is shown in each cell.

31

Table 3 Estimation results of panel logit regression: smokers vs. non-smokers
Constant

D_SMOKER
DELAY
AMOUNT
RETURN
D_DELAY_M2
D_DELAY_M3
D_DELAY_M4
D_DELAY_M5
D_AMOUNT_M2
D_AMOUNT_M3
D_RETURN_M4
D_RETURN_M5
D_RETURN_M6
D_RETURN_M7
Pseudo R2
Observation

Coef.
-2.205-0.658
0.03
0.001
0.01

p value[0.000]**[0.000]**[0.170][0.000]**[0.000]**Coef.
p value-1.691 [0.000]**-0.662 [0.000]**

0.01
0.3
0.285
0.201
0.201
0.987
1.434

[0.000]**[0.003]**[0.004]**[0.043]*[0.043]*[0.000]**[0.000]**

0.184
5360

Note: ** indicates significance at the 1% level and * at the 5% level.

32

0.184
5360

Coef.
p value-1.434 [0.000]**-0.663 [0.000]**

0.3
0.285
0.201
0.201
1.017
1.471
0.84
1.459
1.692
2.594

[0.003]**[0.004]**[0.043]*[0.043]*[0.000]**[0.000]**[0.000]**[0.000]**[0.000]**[0.000]**
0.185
5360

Table 4 Estimation results of panel logit regression: effect of deprivation

D_DEPRIVATIONDELAY
AMOUNT
RETURN
Pseudo R2
Observation

D_DEPRIVATION
RETURN
D_DELAY_T2
D_DELAY_T3
D_DELAY_T4
D_DELAY_T5
D_AMOUNT_T2
D_AMOUNT_T3
D_AMOUNT_T4
D_AMOUNT_T5
Pseudo R2
Observation

Real tobacco session
Coef.
p value-0.161 [0.006]**-0.031 [0.000]**-1.750 [0.000]**
0.002 [0.000]**
0.208
49persons 7840

Real tobacco session
Coef.
p value-0.166 [0.005]**
0.002 [0.000]**-0.113 [0.234]-0.185 [0.052]-0.158 [0.096]-0.462 [0.000]**
0.552 [0.000]**
0.060 [0.472]-1.684 [0.000]**-1.854 [0.000]**
0.228
49persons 7840

Hypothetical tobacco session
Coef.
p value
0.048 [0.411]-0.0002 [0.951]-1.321 [0.000]**
0.002 [0.000]**
0.201
47persons 7520

Hypothetical tobacco session
Coef.
p value
0.051 [0.400]
0.003 [0.000]**-0.118 [0.216]-0.195 [0.041]*
0.127 [0.183]-0.149 [0.117]
0.753 [0.000]**
0.535 [0.000]**-1.280 [0.000]**-1.368 [0.000]**
0.234
47persons
7520

Money
Coef.
0.089
0.087
0.002
0.021

sessionp value[0.219][0.001]**[0.000]**[0.000]**0.432
50persons 8000

D_DEPRIVATION
RETURN
D_DELAY_M2
D_DELAY_M3
D_DELAY_M4
D_DELAY_M5
D_AMOUNT_M2
D_AMOUNT_M3

Pseudo R2
Observation

Note: The numbers of observations differ because those who only chose A or only chose B are excluded.

33

Money session
Coef.
p value
0.090 [0.215]
0.022 [0.000]**
0.637 [0.000]**
0.624 [0.000]**
0.524 [0.000]**
0.498 [0.000]**
2.084 [0.000]**
3.120 [0.000]**

50persons

0.442
8000

Table 5

Estimation results of panel logit regression: light vs. heavy smokers
Separation (a)Real tobacco session
Hypothetical tobacco session
light smokers
heavy smokers
light smokers
heavy smokers
Coef.
p valueCoef.
p valueCoef.
p valueCoef.
p value
D_DEPRIVATION
0.014 [0.886]-0.391 [0.000]**-0.161 [0.098]
0.129 [0.089]
RETURN
0.002 [0.000]**
0.003 [0.000]**
0.002 [0.000]**
0.003 [0.000]**
DELAY-0.017 [0.121]-0.042 [0.000]**-0.005 [0.401]
0.002 [0.707]
AMOUNT-2.311 [0.000]**-1.46 [0.000]**-1.634 [0.000]**-1.075 [0.000]**
2
0.210
0.232
0.202
0.214
Pseudo R
Observations
17persons2720 31persons
4960 17persons
2720 29persons
4640

Separation (b)Real tobacco session
Hypothetical tobacco session
light smokers
heavy smokers
light smokers
heavy smokers
Coef.
p valueCoef.
p valueCoef.
p valueCoef.
p value
D_DEPRIVATION
0.058 [0.424]-0.876 [0.000]**
0.185 [0.010]*-0.363 [0.001]**
RETURN
0.002 [0.000]**
0.004 [0.000]**
0.002 [0.000]**
0.003 [0.000]**
DELAY-0.024 [0.005]**-0.05 [0.000]**
0.003 [0.524]-0.008 [0.172]
AMOUNT-2.114 [0.000]**-1.169 [0.000]**-1.557 [0.000]**-0.736 [0.000]**
2
0.218
0.249
0.211
0.215
Pseudo R
Observation
31persons4960 17persons
2720 30persons
4800 16persons
2560

Note: Note: The numbers of observations differ because those who only chose A or only chose B are excluded.

34

degree of desire to smoke

10
9
8
7
6
5
4
3
2
1

deprivatedusual
just after
just after
just after
start thethethe money
experiment hypothetical session
tobaccosessionFigure 1

just after
the real
tobaccosessionHow strongly do you want to smoke now?

Note: 49 subjects are asked to choose from 1 (“I do not want to smoke now”) to 10 (“I wantvery much to smoke now.” They were asked the question twice, so that the number of responses
is 98.

35

Figure 2 Fraction who chose the later option (B)Note: Vertical bars represent ±SEM (standard error of means)36Figure 3

Histogram of the number of cigarettes that subjects typically smoke per day

37

Appendix: Definition of variables used in regressions
variable name

Explanation

D_SMOKER

smoker dummy variable: 1 when subjects is smoker, 0 otherwise

D_DEPRIVATION deprivation dummy variable: 1 when subjects is nicotine deprived, 0otherwise

DELAY

time of earlier reward

D_DELAY_M2

delay dummy variable in money session: 1 when delay is one week, 0
otherwise

D_DELAY_M3

delay dummy variable in money session: 1 when delay is two weeks, 0
otherwise

D_DELAY_M4

delay dummy variable in money session: 1 when delay is three weeks, 0
otherwise

D_DELAY_M5

delay dummy variable in money session: 1 when delay is four weeks, 0
otherwise

D_DELAY_T2

delay dummy variable in tobacco sessions: 1 when delay is 10min, 0
otherwise in real tobacco session, 1 when delay is 1 hours, 0 otherwise in
hypothetical tobacco session

D_DELAY_T3

delay dummy variable in tobacco sessions: 1 when delay is 20min, 0
otherwise in real tobacco session, 1 when delay is 3 hours, 0 otherwise in
hypothetical tobacco session

D_DELAY_T4

delay dummy variable in tobacco sessions: 1 when delay is 30min, 0
otherwise in real tobacco session, 1 when delay is 12 hours, 0 otherwise
in hypothetical tobacco session

D_DELAY_T5

delay dummy variable in tobacco sessions: 1 when delay is 40min, 0
otherwise in real tobacco session, 1 when delay is 24 hours, 0 otherwise
in hypothetical tobacco session

AMOUNTamount of earlier rewards

D_AMOUNT_M2

delay amount variable in money session: 1 when amount is 2000 yen, 0
otherwise

D_AMOUNT_M3

delay amount variable in money session: 1 when amount is 3000 yen, 0
otherwise

D_AMOUNT_T2

delay amount variable in tobacco sessions: 1 when amount is 2 puffs, 0
otherwise

D_AMOUNT_T3

delay amount variable in tobacco sessions: 1 when amount is 0.5
cigarettes, 0 otherwise

38

D_AMOUNT_T4

delay amount variable in tobacco sessions: 1 when amount is 1
cigarettes, 0 otherwise

D_AMOUNT_T5

delay amount variable in tobacco sessions: 1 when amount is 1.5
cigarettes, 0 otherwise

RETURN

return of later reward

D_RETURN_M4

delay return variable in money session: 1 when return is 100%, 0
otherwise

D_RETURN_M5

delay return variable in money session: 1 when return is 150%, 0
otherwise

D_RETURN_M6

delay return variable in money session: 1 when return is 200%, 0
otherwise

D_RETURN_M7

delay return variable in money session: 1 when return is 300%, 0
otherwise39