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The European Journal of Health Economics

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01-05-2015 | Original Paper

The Icelandic economic collapse, smoking, and the role of labor-market changes

Authors: Thorhildur Ólafsdóttir, Birgir Hrafnkelsson, Tinna Laufey Ásgeirsdóttir

Published in: The European Journal of Health Economics | Issue 4/2015

Abstract

Smoking is related to health deterioration through increased risk of various diseases. Changes in this health behavior could contribute to the documented health improvements during economic downturns. Furthermore, the reasons for changes in behavior are not well understood. We explore smoking behavior in Iceland before and after the sudden and unexpected economic crisis in 2008. Furthermore, to explore the mechanisms through which smoking could be affected we focus on the role of labor-market changes. Both real income and working hours fell significantly and economic theory suggests that such changes can affect health behaviors which in turn affect health. We use individual longitudinal data from 2007 to 2009, incidentally before and after the crisis hit. The data originates from a postal survey, collected by The Public Health Institute in Iceland. Two outcomes are explored: smoking participation and smoking intensity, using pooled ordinary least squares (OLS) and linear probability models. The detected reduction in both outcomes is not explained by the changes in labor-market variables. Other factors in the demand function for tobacco play a more important role. The most notable are real prices which increased in particular for imported goods because of the devaluation of the Icelandic currency as a result of the economic collapse.

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Title: The Icelandic economic collapse, smoking, and the role of labor-market changes
Authors: Thorhildur Ólafsdóttir
Birgir Hrafnkelsson
Tinna Laufey Ásgeirsdóttir
Publication date: 01-05-2015
Publisher: Springer Berlin Heidelberg
Published in: The European Journal of Health Economics / Issue 4/2015
Print ISSN: 1618-7598
Electronic ISSN: 1618-7601
DOI: https://doi.org/10.1007/s10198-014-0580-x

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