Abstract: Smoking is still a serious economic, health, and social problem despite various efforts to curb its prevalence. We examined the influence of financial literacy and financial education on the smoking behavior in the United States in terms of the use of rational decision-making abilities to reduce irrational behavior. We hypothesized that financial literacy and financial education, as proxies for rational decision making, would reduce the likelihood of smoking. We used data from the Preference Parameters Study (PPS) of Osaka University conducted in the United States in 2010 and applied probit regression models to test our hypothesis on a sample of 3831 individuals. We found that financially literate people are less likely to be smokers, though we found no clear role of financial education in reducing the likelihood of smoking. Further, respondents’ gender, age, unemployment status, and risky health behaviors such as drinking and gambling, have a significantly positive association with smoking, while marital status, university degree, family size, household income, household assets, physical exercise, and level of happiness have a significantly negative association. Our findings suggest that financial literacy, as an instrument encouraging rational decision making, could be a tool to help reduce smoking in the United States.
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