Association for Public Policy Analysis & Management

Since many states have laws restricting the pricing of insurance premiums based on smoking status, generations of economists have inquired where the incidence of smoking falls. Using data from the National Survey of Midlife Development and employing a family fixed effects design, I estimate the incidence of smoking. I find smokershave lower wages suggesting that the incidence of laws restricting insurance premium differentials are reflected in wages. A comparison across, twins, siblings and singletons suggests that unobserved heterogeneity plays a limited role in explaining the incidence of smoking.