TY  - JOUR
AU  - Evans,William N.
AU  - Montgomery,Edward
TI  - Education and Health: Where There's Smoke There's an Instrument
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 4949
PY  - 1994
Y2  - December 1994
UR  - http://www.nber.org/papers/w4949
L1  - http://www.nber.org/papers/w4949.pdf
N1  - Author contact info:
William N. Evans
Keough-Hesburgh Professor of Economics
Department of Economics and Econometrics
447 Flanner Hall
University of Notre Dame
Notre Dame, IN 46556
Tel: 574-631-7039
E-Mail: wevans1@nd.edu

Edward B. Montgomery
Dean, Georgetown Public Policy Institute
Georgetown University
3520 Prospect Street NW, 4th Floor
Washington DC 20007
Tel: 202/687-7051
Fax: 202/687-1904
E-Mail: ebm48@georgetown.edu
AB  - 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.
ER  -