Home
 / 
Addiction and Health

Addiction and Health




Summary

Economists approach addiction from a behavioral point of view and with a focus on assessing and measuring the effects of policy interventions, such as taxation and prohibitions. The canonical model, Becker and Murphy’s (1988) rational addiction model, considers a world in which people are aware that their consumption of addictive goods today will affect their behavior in the future and make choices accordingly. This model provides a framework to analyze addictive behaviors and has led to a large and detailed body of empirical evidence. The model has also been extended in many ways to incorporate more realistic psychological, physiological, and social aspects.

The standard model makes several predictions that are falsified, notably including the prediction that addicts do not regret their past decisions. A number of theoretical investigations relax or otherwise modify the assumptions of the standard model to address this failing. In these models, people may not know themselves well enough to predict whether they will find some good or activity addictive, or they may have self-control problems that prevent them from quitting a harmful addiction even though they realize that addiction is harmful. Policy implications vary across theoretical models as the assumptions driving the model vary, so the theoretical literature has not come to a consensus on optimal policy toward addictive goods. Current research continues to incorporate results from other disciplines, such as neuroscience, into economic models.




Economists have also produced a large body of statistical evidence detailing what kind of people consume various addictive goods, the extent to which people respond to changes in the price of addictive goods, and how consumption varies with prices, income, and other incentives over short and long time periods. This literature shows that addicts do respond to prices and other incentives, that past consumption of addictive goods causes current consumption of addictive goods, and that consumption of a given addictive good is best understood as a part of a profile of consumption of various addictive goods rather than in isolation, for example, policy makers should consider the effects of a change in heroin policy on alcohol consumption in addition to heroin consumption.

Bibliography:

  1. Auld, M. C. (2005). Causal effect of early initiation on adolescent smoking patterns. Canadian Journal of Economics 38(3), 709–734.
  2. Auld, M. C. and Grootendorst, P. (2004). An empirical analysis of milk addiction. Journal of Health Economics 23(6), 1117–1133.
  3. Badger, G. J., Bickel, W. K., Giordano, L. A., Jacobs, E. A. and Loewenstein, G. (2007). Altered states: The impact of immediate craving on the valuation of current and future opioids. Journal of Health Economics 26(5), 865–876.
  4. de Bartolome, C. and Irvine, I. J. (in press). The economics of smoking bans. Working Paper no. 201027. Geary Institute, University College Dublin.
  5. Becker, G., Grossman, M. and Murphy, K. (1994). An empirical analysis of cigarette addiction. American Economic Review 84(3), 396–418.
  6. Becker, G. and Murphy, K. (1988). A theory of rational addiction. Journal of Political Economy 96(4), 675–700.
  7. Bernheim, B. D. and Rangel, A. (2004). Addiction and cue-triggered decision processes. American Economic Review 94(5), 1558–1590.
  8. Cameron, L. and Williams, J. (2001). Cannabis, alcohol, and cigarettes: Substitutes or complements? Economic Record 77(236), 19–34.
  9. Cawley, J. (2008). Reefer madness, Frank the tank or pretty woman: To what extent do addictive behaviors respond to incentives? In Sloan, F. A. and Kasper, H. (eds.) Incentives and choice in health care. Cambridge, MA: MIT Press.
  10. Chaloupka, F. and Warner, K. (2000). The economics of smoking. In Culyer, A. and Newhouse, J. (eds.) Handbook of health economics 1(B), pp. 1539–1627. North Holland: Elsevier.
  11. DeCicca, P., Kenkel, D. and Mathios, A. (2008). Cigarette taxes and the transition from youth to adult smoking: Smoking initiation, cessation and participation. Journal of Health Economics 27(4), 904–917.
  12. Dinardo, J. and Lemieux, T. (2001). Alcohol, marijuana, and American youth: The unintended consequences of government regulation. Journal of Health Economics 20(6), 991–1010.
  13. Frederick, S., Loewenstein, G. and O’Donoghue, T. (2002). Time discounting and time preferences : A critical review. Journal of Economic Literature 40(2), 351–401.
  14. Gallet, C. and List, J. (2002). Cigarette demand: A meta-analysis of elasticities. Health Economics 12(10), 821–835.
  15. Gilleskie, D. and Strumpf, K. (2005). The behavioral dynamics of youth smoking. Journal of Human Resources 40(4), 822–866.
  16. Goldfarb, R. S., Leonard, T. C. and Suranovic, S. M. (2001). Are rival theories of smoking underdetermined? Journal of Economic Methodology 8(2), 229–251.
  17. Gruber, J. and Koszegi, B. (2001). Is addiction rational? Theory and evidence. Quarterly Journal of Economics 116(4), 1261–1303.
  18. Gruber, J. H. and Mullainathan, S. (2005). Do cigarette taxes make smokers happier? The B.E. Journal of Economics Analysis & Policy 5(1), 1–45.
  19. Gul, F. and Pesendorfer, W. (2007). Harmful addiction. Review of Economic Studies 74(1), 147–172.
  20. Jofre-Bonet, M. and Petry, N. M. (2008). Trading apples for oranges? Results of an experiment on the effects of heroin and cocaine price changes on addicts polydrug use. Journal of Economic Behavior and Organization 66(2), 281–311.
  21. Keeler, T. E., Marciniak, M. and Hu, T. (1999). Rational addiction and smoking cessation: An empirical study. Journal of Socio-Economics 28(5), 633–643.
  22. Koob, G. F. and Le Moal, M. (2008). Addiction and the brain antireward system. Annual Review of Psychology 59, 29–53.
  23. Laux, F. L. (2000). Addiction as a market failure: using rational addiction results to justify tobacco regulation. Journal of Health Economics 19(4), 421–437.
  24. Lee, L. W. (1993). Would harassing drug users work? Journal of Political Economy 101(5), 939–959.
  25. Levy, M. (in press). An empirical analysis of biases in cigarette addiction. Working Paper.
  26. Loewenstein, C., O’Donoghue, T. and Rabin, M. (2003). Projection bias in future utility. Quarterly Journal of Economics 118(4), 1209–1248.
  27. Mas-Colell, A., Whinston, M. and Green, J. (1995). Microeconomic theory. Oxford: Oxford University Press.
  28. Miron, J. and Zweibel, J. (1995). The economic case against drug prohibition. Journal of Economic Perspectives 9(4), 175–192.
  29. Newlin, D. B. (2008). Are ‘‘physiological’’ and ‘‘psychological’’ addiction really different? Well, no!… um. er, yes? Substance Use and Misuse 43(7), 967–971.
  30. Orphanides, A. and Zervos, D. (1995). Rational addiction with learning and regret. Journal of Political Economy 103(4), 739–758.
  31. Olekalns, N. and Bardsley, P. (1996). Rational addiction to caffeine: An analysis of coffee consumption. Journal of Political Economy 104(5), 1100–1104.
  32. Palacios-Huerta, I. (in press). Multiple additions. Working Paper 2001–20. Department of Economics, Brown University.
  33. Redish, A. D., Jensen, A. and Johnson, A. (2008). A unified framework for addiction: Vulnerabilities in the decision process. Behavioral and Brain Sciences 31, 415–487.
  34. Sen, A., Ariizumi, H. and Driambe, D. (2010). Do changes in cigarette taxes impact youth smoking? Evidence from Canadian provinces. Forum for Health Economics and Policy 13(2), Aricle 12.
  35. Suranovic, S., Goldfarb, R. and Leonard, T. (1999). An economic theory of cigarette addiction. Journal of Health Economics 18, 1–29.
  36. Tomer, J. F. (2001). Addictions are not rational: A socio-economic model of addictive behavior. Journal of Socio-Economics 33, 243–261.
  37. Viscusi, W. K. (2002). The new cigarette paternalism. Regulation Winter 2002–2003 58–64.
  38. Heyman, G. M. (2009). Addiction: A disorder of choice. Cambridge, MA: Harvard University Press.
◀Abortion and Health
Advertising as a Determinant of Health▶