By deciding to smoke in spite of the health hazards they face, smokers demonstrate a willingness to take more risks than non-smokers. This characteristic is not limited to smoking. Smokers are apparently also willing to bear more risks in other aspects of their lives. For example, they take more hazardous jobs than non-smokers.
When people take jobs that involve higher risks, they usually receive higher compensation. But a recent article in the Review of Economics and Statistics shows that smokers receive a lower risk-adjusted pay than their non-smoking counterparts.
The lost workdays lowers smokers’ productivity, and according to the authors explains why they are under-compensated for the riskier jobs they take. The authors conclude that smokers and non-smokers should be viewed as segmented labour market groups.
Source: Higher Risk, Lower Pay, Economic Intuition, Summer 2001; based on W. Kip Viscusi and Joni Hersch, Cigarette Smokers as Job Risk Takers, Review of Economics and Statistics, May 2001.
For more Economic Intuition research summaries http://www.economicintuition.com
For more on Wages http://www.ncpa.org/iss/eco/
FMF Policy Bulletin\26 March 2002
