Economic Man and the Consumption of Addictive Goods: The Case of Two Goods
AbstractIt is well-known that cigarette smoking and the use of other addictive goods is harmful to health. Still, some people smoke cigarettes and drink alcohol in their daily life. The consumption of addictive goods seems, therefore, to be the anti-thesis of rational behavior. In this paper, however, it is demonstrated that a rational individual, in the sense that he maximizes his well-being while anticipating the future consequences of his choices, may in fact choose to consume addictive goods. Specifically, the two-good extension of the rational addiction model is demonstrated and related to relevant policy questions. For instance, should one encourage the use of smokeless tobacco in smoking cessation programs? According to the empirical results, the answer is no. Further, should one discourage smoking by increasing the tax on cigarettes? Again, the answer is no.
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Bibliographic InfoPaper provided by Umeå University, Department of Economics in its series Umeå Economic Studies with number 615.
Length: 15 pages
Date of creation: 07 Oct 2003
Date of revision:
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Postal: Department of Economics, Umeå University, S-901 87 Umeå, Sweden
Phone: 090 - 786 61 42
Fax: 090 - 77 23 02
Web page: http://www.econ.umu.se/
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Alcohol; Bootlegging; Cigarette Smoking; Complements; Rational addiction; Substitutes.;
Find related papers by JEL classification:
- I10 - Health, Education, and Welfare - - Health - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2003-10-12 (All new papers)
- NEP-EDU-2003-10-12 (Education)
- NEP-HEA-2003-10-12 (Health Economics)
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- Pierpaolo Pierani & Silvia Tiezzi, 2009. "Addiction and interaction between alcohol and tobacco consumption," Empirical Economics, Springer, vol. 37(1), pages 1-23, September.
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