Essays on the Economics of Tobacco Harm Reduction and on Financial Literacy and Retirement Decision-Making

TitleEssays on the Economics of Tobacco Harm Reduction and on Financial Literacy and Retirement Decision-Making
Publication TypeThesis
Year of Publication2013
AuthorsMaki, JAnne
AdvisorGoodwin, BMorrill Me
Number of Pages188
Date Published2013
UniversityNorth Carolina State University
CityRaleigh, NC
Thesis TypePh.D.
Accession Number1459432336
KeywordsEnd of life decisions, Methodology, Net Worth and Assets, Risk Taking

This dissertation consists of four essays exploring policies and practices that highlight the role of information on decision making. The first two essays can be broadly described as evaluating policies pertaining to tobacco harm reduction--the practice of recommending the use of a less harmful tobacco alternative to those smokers who are unwilling or unable to quit smoking. If oral tobacco use is less harmful than cigarette smoking, consumers may be better off by substituting one product for the other. Although the risk associated with oral tobacco use has been studied in the past, previous estimates may be biased as they did not account for the role of risky behavior which is correlated with both health outcomes and tobacco use. To address this, I undertake an analysis of the association between oral tobacco and oral cancer, while controlling for risky health behaviors. My findings show that when controlling for risky sexual behavior, the estimated causal effect of oral tobacco use on oral cancer is significantly diminished. A better understanding of the true costs (in terms of health risks) associated with use of oral tobacco will allow individuals to make consumption decisions which maximize utility and encourage cost effective and efficient tobacco control policies. If smokers are made aware of the differing health risks between cigarette smoking and oral tobacco use, they may be able to improve their well-being by substituting one product for the other. However, labeling oral tobacco as a less harmful alternative may induce usage by those who would have otherwise abstained from tobacco use. To better understand these opposing consequences, I explore a policy change in Finland. Finland implemented a ban on the sale of oral tobacco when joining the European Union in 1995. I estimate that removing this less harmful alternative from the market increased the smoking rate, relative to what it would have been, by using the neighboring country of Sweden as a counterfactual. The second two essays look at improving employee retirement readiness through actions undertaken at the firm level. The employer sponsored 401(k) plan can be an effective tool in saving for retirement, yet many employees do not participate. If non-participation is due to low levels of financial literacy or due to inertia, an intervention may be effectual in encouraging participation. In my third essay, I report on the effectiveness of a simple informational intervention that highlighted the value of saving in conjunction with the employer match. This one page flyer demonstrated how saving today can lead to substantial wealth accumulation over time. I find that the intervention increases participation rates among younger employees relative to a control group. In the final essay, I explore the effect of pre-retirement seminars on the financial literacy and retirement plans of older employees at several large firms. These seminars are designed to provide information which will assist employees in making the important decisions they will face when transiting into retirement. Results suggest that participation did lead to an increase in financial literacy and that this learning is associated with a change in retirement plans. These last two essays underscore the importance of financial literacy in retirement planning, preparedness, and decision-making.

Endnote Keywords

Economic theory

Short TitleEssays on the Economics of Tobacco Harm Reduction and on Financial Literacy and Retirement Decision-Making
Citation Key5989