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. Copyright 2000 by The Economic Society of Australia.
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Article provided by The Economic Society of Australia in its journal The Economic Record.
Volume (Year): 76 (2000) Issue (Month): 234 (September) Pages: 263-72 Download reference. The following formats are available: HTML
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