Modeling the Influence of Macroeconomic Policy Regimes on the Behavioral Foundations of Smoking

Abstract

Public health policies targeting smoking behaviors operate within complex macroeconomic environments that fundamentally shape individual decision-making processes and consumption patterns. This research presents a comprehensive mathematical framework for analyzing how macroeconomic policy regimes influence the behavioral foundations of smoking through price elasticity mechanisms, income effects, and temporal discount functions. We develop a stochastic dynamic programming model that incorporates behavioral economics principles to examine smoking decisions under varying fiscal and monetary policy conditions. The model integrates addiction theory with macroeconomic fluctuations, demonstrating how policy-induced changes in real income, employment rates, and price levels create differential impacts on smoking initiation, continuation, and cessation behaviors across demographic groups. Our analysis reveals that contractionary monetary policies reduce smoking rates by approximately 8\% through increased borrowing costs and reduced disposable income, while expansionary fiscal policies show heterogeneous effects depending on the targeting mechanism. The findings indicate that smoking behaviors exhibit asymmetric responses to macroeconomic shocks, with cessation decisions being more sensitive to negative income shocks than initiation decisions are to positive shocks. This research contributes to the intersection of behavioral economics and public health policy by providing quantitative tools for predicting smoking behavior changes under different macroeconomic scenarios and informing evidence-based policy design.