Jun 4, 2008

43,836 SFR: An Update on the Non-Smoking Front

43,836 SFR is the life-time present discounted value I saved by deciding not to smoke anymore! The underlying data for the computation is a yearly inflation rate of 2%, the assumption that in 40 years my doctor will forbid me to smoke, a constant consumption of roughly 10 cigarettes a day and a cigarette price that linearly increases from its current price of 6 Swiss Francs to 12 Francs in 40 years. Those are all rather moderate assumptions. So actually, I could buy now a nice Volkswagen car since I basically got it for free!
Alternatively, if I would invest the money I save each year and earn an average rate of 6% per annum which I reinvest, I would have 231,913 SFR in the year 2048, which is equivalent to a present value of slightly above 100,000 SFR. My Volkswagen just became a BMW, but I have to wait until 2048 to buy it.
Some other intersting posts on the subject besides my old and older post: VOX and Freakonimcs I and Freakonomics II.

3 comments:

Pierre-Louis said...

Plus, you'll make more money as a non-smoker:

More Bad News for Smokers? The Effects of Cigarette Smoking on Wages

Phillip B. Levine, Tara A. Gustafson and Ann D. Velenchik
Industrial and Labor Relations Review, 1997

and you will be more productive:

Effect of Smoking Status on Productivity Loss

Journal of Occupational & Environmental Medicine, 2006.
Bunn, William B. III MD, JD, MPH; Stave, Gregg M. MD, JD, MPH; Downs, Kristen E. MSPH; Alvir, Jose Ma. J. DrPH; Dirani, Riad PhD

cosi said...
This comment has been removed by the author.
cosi said...

If you buy the Wolkswagen today, you will also have a compelling incentive not to restart smoking.