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Model selection and multiple research goals: The case of rational addiction

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  • Andrew Yuengert
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    Abstract

    A comparison of rational addiction and time inconsistency models of addiction highlights the complexities of model selection when researchers have goals in addition to empirical fit. Although currently the two models of addiction are underdetermined by data, each offers a different understanding of addiction; moreover, the two models offer starkly different policy implications. When the goals of understanding and policy usefulness are added to the goal of empirical fit, a more complex account of model selection is needed. First, the principle of parsimony loses some of its force when researchers also value understanding and policy usefulness. Second, when economists value understanding as well as pure prediction, a broader justification of the realism of assumptions becomes possible. Third, because radically different policy advice flows from these empirically equivalent models, this literature underscores the difficulty of separating the seemingly positive analysis of consumer behavior from normative analysis.

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    Bibliographic Info

    Article provided by Taylor & Francis Journals in its journal Journal of Economic Methodology.

    Volume (Year): 13 (2006)
    Issue (Month): 1 ()
    Pages: 77-96

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    Handle: RePEc:taf:jecmet:v:13:y:2006:i:1:p:77-96

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    Related research

    Keywords: rational addiction; time inconsistency; model selection; parsimony; realism of assumptions;

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    1. Dockner, Engelbert J & Feichtinger, Gustav, 1993. "Cyclical Consumption Patterns and Rational Addiction," American Economic Review, American Economic Association, vol. 83(1), pages 256-63, March.
    2. Thaler, Richard, 1981. "Some empirical evidence on dynamic inconsistency," Economics Letters, Elsevier, vol. 8(3), pages 201-207.
    3. Thaler, Richard H & Shefrin, H M, 1981. "An Economic Theory of Self-Control," Journal of Political Economy, University of Chicago Press, vol. 89(2), pages 392-406, April.
    4. Athanasios Orphanides & David Zervos, 1992. "Rational addiction with learning and regret," Finance and Economics Discussion Series 216, Board of Governors of the Federal Reserve System (U.S.).
    5. Gary S. Becker & Michael Grossman & Kevin M. Murphy, 1990. "An Empirical Analysis of Cigarette Addiction," NBER Working Papers 3322, National Bureau of Economic Research, Inc.
    6. Winston, Gordon C., 1980. "Addiction and backsliding : A theory of compulsive consumption," Journal of Economic Behavior & Organization, Elsevier, vol. 1(4), pages 295-324, December.
    7. Matthew Rabin & Ted O'Donoghue, 1999. "Doing It Now or Later," American Economic Review, American Economic Association, vol. 89(1), pages 103-124, March.
    8. Gary S. Becker & Kevin M. Murphy, 1986. "A Theory of Rational Addiction," University of Chicago - George G. Stigler Center for Study of Economy and State 41, Chicago - Center for Study of Economy and State.
    9. Stigler, George J & Becker, Gary S, 1977. "De Gustibus Non Est Disputandum," American Economic Review, American Economic Association, vol. 67(2), pages 76-90, March.
    10. Hirschman, Albert O., 1985. "Against Parsimony: Three Easy Ways of Complicating some Categories of Economic Discourse," Economics and Philosophy, Cambridge University Press, vol. 1(01), pages 7-21, April.
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    Cited by:
    1. Laibson, David, 1997. "Golden Eggs and Hyperbolic Discounting," The Quarterly Journal of Economics, MIT Press, vol. 112(2), pages 443-77, May.

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