NCPA - National Center for Policy Analysis

Smokers Take More Risk at Lower Wages

March 19, 2002

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.

  • Smokers accept jobs that are on average 8 percent riskier but receive less than half the compensation obtained by non-smokers for job injuries -- $13,700 versus $31,300.
  • Smokers are more likely to get injured, both at work and at home, so they lose more workdays than non-smokers -- with about half the difference in lost workdays attributable to smoking, rather than the riskiness of the jobs they take.
  • The annual number of lost workdays among smokers per 100 workers is 92, compared to the 78 lost workdays estimated among nonsmokers.

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 labor 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.

 

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