Modelling Addictive Consumption

Seminar paper from the year 2018 in the subject Economy - Health Economics, grade: 1,0, University of Hohenheim (Institut für Health Care & Public Management), language: English, abstract: It is proposed by Gary S. Becker and Kevin M. Murphy that addictive behavior could be usefully integrated in the rational choice framework. According to their theory, consumers are forward-looking in their decision making and calculate present and future consequences of consuming an addictive good. Becker and Murphy even claim that analyzing addictions as a rational choice offers new insights and a better understanding of addiction. Earlier economic models typically explain addictions with irrational or myopic behavior in which individuals ignore or highly discount the future when making their decisions. While the rational addiction model has become a standard tool in the economic analysis of addictive behavior, it has also been subject to much criticism. As shown in this paper, there is much evidence that model’s assumptions are unrealistic. It is argued however that the model’s predictions rather than its assumptions should be rejected based on the empirical evidence. By reviewing empirical studies which tested the Becker Murphy model, this paper seeks to examine to what extent the rational choice approach can be legitimately applied to addictive behavior. The model’s assumptions and implications will be explained. later, the main criticisms about the theory will be discussed. After that, the most relevant studies and their implications will be reviewed.

For much of the 20th century, theories of addictive behaviour and motivation were polarized between two models. The first model viewed addiction as a moral failure for which addicts are rightly held responsible and judged accordingly. The second model, in contrast, viewed addiction as a specific brain disease caused by neurobiological adaptations occurring in response to chronic drug or alcohol use, and over which addicts have no choice or control. As our capacity to observe neurobiological phenomena improved, the second model became scientific orthodoxy, increasingly dominating addiction research and informing public understandings of addiction. More recently, however, a dissenting view has emerged within addiction research, based partly on new scientific research and partly on progress in philosophical and psychological understandings of relevant mental phenomena. This view does not revert to treating addiction as a moral failure, but nonetheless holds that addictive behaviour is fundamentally motivated by choice and subject to at least a degree of voluntary control. On this alternative model of addiction, addictive behaviour is an instrumental means to ends that are desired by the individual, although much controversy exists with respect to the rationality or irrationality of these ends, the degree and nature of the voluntary control of addictive behaviour and motivation, the explanation of the difference between addictive and non-addictive behaviour and motivation, and, lastly, the extent to which addictive behaviour and motivation is correctly characterised as pathological or diseased. This research topic includes papers in the traditions of neuroscience, psychology, philosophy, law and social science that explore alternative understandings of addiction.

Choice, Behavioural Economics and Addiction is about the theory, data, and applied implications of choice-based models of substance use and addiction. The distinction between substance use and addiction is important, because many individuals use substances but are not also addicted to them. The behavioural economic perspective has made contributions to the analysis of both of these phenomena and, while the major focus of the book is on theories of addiction, it is necessary also to consider the behavioural economic account of substance use in order to place the theories in their proper context and provide full coverage of the contribution of behavioural economics to this field of study. The book discusses the four major theories of addiction that have been developed in the area of economic science/behavioural economics. They are: . hyperbolic discounting . melioration . relative addiction . rational addiction The main objective of the book is to popularise these ideas among addiction researchers, academics and practitioners. The specific aims are to articulate the shared and distinctive elements of these four theories, to present and discuss the latest empirical work on substance abuse and addiction that is being conducted in this area, and to articulate a range of applied implications of this body of work for clinical, public health and public policy initiatives. The book is based on an invitation-only conference entitled, Choice, Behavioural Economics and Addiction: Theory, Evidence and Applications held at the University of Alabama at Birmingham, March 30 - April 1, 2001. The conference was attended by prominent scientists and scholars, representing a range of disciplines concerned with theories of addiction and their consequences for policy and practice. The papers in the book are based on the papers given at the above conference, together with commentaries by distinguished experts and, in many cases, replies to these comments by the presenters.

This volume presents a compendium of models of addiction placed within an integrated framework.

In this engaging new book, Gerda Reith explores key theoretical concepts in the sociology of consumption. Drawing on the ideas of Foucault, Marx and Bataille, amongst others, she investigates the ways that understandings of ‘the problems of consumption’ change over time, and asks what these changes can tell us about their wider social and political contexts. Through this, she uses ideas about both consumption and addiction to explore issues around identity and desire, excess and control and reason and disorder. She also assesses how our concept of 'normal' consumption has grown out of efforts to regulate behaviour historically considered as disruptive or deviant, and how in the contemporary world the 'dark side' of consumption has been medicalised in terms of addiction, pathology and irrationality. By drawing on case studies of drugs, food and gambling, the volume demonstrates the ways in which modern practices of consumption are rooted in historical processes and embedded in geopolitical structures of power. It not only asks how modern consumer culture came to be in the form it is today, but also questions what its various manifestations can tell us about wider issues in capitalist modernity. Addictive Consumption offers a compelling new perspective on the origins, development and problems of consumption in modern society. The volume’s interdisciplinary profile will appeal to scholars and students in sociology, psychology, history, philosophy and anthropology.

The word ‘addiction’ these days is used to refer to a chronic condition where there is an unhealthily powerful motivation to engage in a particular behaviour. This can be driven by many different factors – physiological, psychological, environmental and social. If we say that it is all about X, we miss V, W, Y and Z. So, some people think addicts are using drugs to escape from unhappy lives, feelings of anxiety and so on; many are. Some people think drugs become addictive because they alter the brain chemistry to create powerful urges; that is often true. Others think that drug taking is about seeking after pleasure; often it is. Some take the view that addiction is a choice – addicts weigh up the pros and cons of doing what they do and decide the former outweigh the latter. Yet others believe that addicts suffer from poor impulse control; that is often true… And so it goes on. When you look at the evidence, you see that all these positions capture important aspects of the problem – but they are not complete explanations. Neuroscience can help us delve more deeply into some of these explanations, while the behavioural and social sciences are better at exploring others. We need a model that puts all this together in a way that can help us decide what to do in different cases. Should we prescribe a drug, give the person some ‘tender loving care’, put them in prison or what? Theory of Addiction provides this synthesis. The first edition was well received: ‘Throughout the book the reader is exposed to a vast number of useful observations...The theoretical aims are timely, refreshing, ambitious and above all challenging. It opens up a new way of looking at addiction and has the potential to move the field of addiction a considerable leap forward. Thus we wholeheartedly would like to recommend the book for students as well as scholars. Read and learn!’ Nordic Studies on Alcohol and Drugs ‘The book provides a comprehensive review of existing theories - over 30 in all - and this synthesis of theories constitutes an important contribution in and of itself... West is to be commended for his synthesis of addiction theories that span neurobiology, psychology and social science and for his insights into what remains unexplained.’ Addiction This new edition of Theory of Addiction builds on the first, including additional theories in the field, a more developed specification of PRIME theory and analysis of the expanding evidence base. With this important new information, Theory of Addiction will continue to be essential reading for all those working in addiction, from student to experienced practitioner – as urged above, Read and learn!

A standard model of addictive process is Becker and Murphy's rational addiction' model, which has the key empirical prediction that the current consumption of addictive goods should respond to future prices, and the key normative prediction that the optimal government regulation of addictive goods should depend only on their interpersonal externalities. While a variety of previous studies have supported this empirical contention, we demonstrate that these results are very fragile. We propose a new empirical test for the case of cigarettes, using state excise tax increases that have been legislatively enacted but are not yet effective, and monthly data on consumption. We find strong evidence that consumption drops when there are announced future tax increases, providing more robust support for the key empirical prediction of the Becker and Murphy model. But we also propose a new formulation of this model that makes only one change, albeit a major one: the incorporation of the inconsistent preferences which are likely to provide a much better platform for understanding the smoking decision. We find that with these preferences the model continues to yield the predictions for forward-looking behavior that have been tested by others and by ourselves. But it has strikingly different normative implications, as with these preferences optimal government policy should depend as well on the internalities' imposed by smokers on themselves. We estimate that the optimal tax per pack of cigarettes should be at least one dollar higher under our formulation than in the rational addiction case.