Ruhr Economic Papers

Ruhr Economic Papers #3

Smoking and Social Interaction

by Panu Poutvaara and Lars -H.R. Siemers

RWI, 03/2007, 33 S./p., 8 Euro, ISBN 978-3-936454-93-2



We study the social interaction of non-smokers and smokers as a sequential game, incorporating insights from social psychology and experimental economics into an economic model. Social norms affect human behavior such that non-smokers do not ask smokers to stop smoking and stay with them, even though disutility from smoking exceeds utility from social interaction. Overall, smoking is unduly often accepted when accommodating smoking is the social norm. The introduction of smoking and non-smoking areas does not overcome this specific inefficiency. We conclude that smoking bans may represent a required (second-best) policy.

JEL-Classification: I18, D01, D11

Keywords: Smoking policy; social norms; guilt aversion; deviant behavior; social interaction