Time-inconsistent preferences and the minimum legal tobacco consuming age.

Summary In both the United States of America and the European Union, Member States are encouraged to prevent young people from starting to smoke by forbidding selling tobacco products to people under a certain age. By contrast, there are in general no legal minimum age requirements for consuming those products. Our aim is to address such discrepancy from a theoretical viewpoint by focusing on the case where people have time-inconsistent preferences. Specifically, we build a three-period (youth, adulthood, old age) model of smoking decision in which individual intertemporal preferences are present-biased. Then, using this model, we show that when agents are naive, that is when they are unaware that their intertemporal preferences are time-inconsistent, it may be worthwhile, from the individual viewpoint, to legally prevent young people from smoking. This conclusion does not always hold, because what is good for an agent in youth can be disputable in adult age (and conversely). When individuals are sophisticated, that is, not naive, a legal smoking age (either for buying, consuming or selling tobacco products) is pointless. This conclusion is also reached if one follows the continuing person approach advocated by Sugden. JEL Classification Numbers : I12, I18, K32, D15.