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Addictive Consumption under Conditions of Risk

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  • HARRY CLARKE

Abstract

Addictive consumption involves health and other risks. This paper analyzes how such risks influence steady state consumption and equilibrium addiction. Mortality risks deter addictive consumption provided they are strongly addiction‐dependent. If however risks are addiction‐independent they may increase addictive consumption. Risks, which lead not to death but to large ongoing disutility, also deter addictive consumption provided they are strongly addiction‐dependent. Non‐steady state extensions of these results hold provided large enough disutility is associated with addiction‐dependent risk. Increasing addiction‐dependent risk and reducing addiction‐independent risk promotes the social objective of reducing addictive consumption.

Suggested Citation

  • Harry Clarke, 2000. "Addictive Consumption under Conditions of Risk," The Economic Record, The Economic Society of Australia, vol. 76(234), pages 263-272, September.
    • Handle: RePEc:bla:ecorec:v:76:y:2000:i:234:p:263-272
    DOI: 10.1111/j.1475-4932.2000.tb00022.x
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    References listed on IDEAS

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    1. Kiefer, Nicholas M, 1988. "Economic Duration Data and Hazard Functions," Journal of Economic Literature, American Economic Association, vol. 26(2), pages 646-679, June.
    2. Chaloupka, Frank, 1991. "Rational Addictive Behavior and Cigarette Smoking," Journal of Political Economy, University of Chicago Press, vol. 99(4), pages 722-742, August.
    3. Hamermesh, Daniel S & Soss, Neal M, 1974. "An Economic Theory of Suicide," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 83-98, Jan.-Feb..
    4. Clarke, Harry R. & Reed, William J., 1994. "Consumption/pollution tradeoffs in an environment vulnerable to pollution-related catastrophic collapse," Journal of Economic Dynamics and Control, Elsevier, vol. 18(5), pages 991-1010, September.
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    Cited by:

    1. Miguel à ngel Mendoza-González & Alberto Villagra-Piña, 2021. "Efectos de la Covid-19 y la restricción a la movilidad de las personas sobre el consumo adictivo de cigarros en México, 2005-2020," Remef - Revista Mexicana de Economía y Finanzas Nueva Época REMEF (The Mexican Journal of Economics and Finance), Instituto Mexicano de Ejecutivos de Finanzas, IMEF, vol. 16(3), pages 1-20, Julio - S.
    2. Donatella Cavagnoli, 2008. "Addiction to work: An Inelastic Wage Elasticity of Labour Supply Equals Long Hours of Work," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 11(2), pages 129-147.
    3. Harry Clarke & Martin Byford, 2009. "Addictive Drug Use Management Policies In A Long‐Run Economic Model," Australian Economic Papers, Wiley Blackwell, vol. 48(2), pages 151-165, June.
    4. Alamar Benjamin & Glantz Stanton A., 2006. "Modeling Addictive Consumption as an Infectious Disease," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 5(1), pages 1-24, March.

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