Abstract
We develop and estimate a life-cycle model of addiction in which forward-looking youth choose to smoke, attend school, work part-time, and consume while facing borrowing constraints. The model features multiple channels for studying the reciprocal causal effects of addiction and education. Variations in endowments and cigarette prices are sources of identification. We show that education causally reduces smoking. A counterfactual experiment finds that in the absence of cigarette smoking, college attendance increases by 2 percentage points in the population. An alternative 25% additional excise tax achieves similar results. Impacts vary substantially across persons of different cognitive and noncognitive abilities.