Economic Analysis of Smoking as a Negative Investment in Capital Health on the Base of Surveys of HSE Students

The paper examines the concept of the health capital alongside the phenomenon of positive and negative investments in it. Neoclassical economic theory implies individuals always act rationally, making their choice solely for reasons of prudence and considering the consequences of their actions. Since health capital is treated as a standalone type of capital, a rational individual would invest in health benefits and refuse to invest in benefits destructively affecting him in order to maximize the number of days during which they would be able to use their human capital and receive financial income accordingly. Nonetheless, due to the observations, individuals tend to act differently. The goal of the study is to identify how investment behavior and the general level of cheerfulness and confidence in the future (animal spirits) affect the fact that individuals are investing negatively in their own health capital. The paper is based on surveys of HSE students in St. Petersburg. By using the econometric analysis of smoking as an example of negative investment in health capital, the study states how to find an explanation for one of the mysteries of social life in post-Soviet countries: the average life expectancy of Russians, extremely low (especially regarding men), even by the standards of underdeveloped countries.