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Life-Expectancy Augmented Rational Addition: A Note

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Author Info
Levy-Livermore, A. () (University of Wollongong)

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Abstract

The Becker-Murphy equality between the addictive commodity's full price and marginal utility is modified by discounting the market price and marginal utility of the addictive commodity by the probability of living at least until the time under consideration. the rate of change of the shadow price of addiction is lower than that obtained with models ignoring the effectof addiction on the probability of dying.

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File URL: http://www.uow.edu.au/content/groups/public/@web/@commerce/@econ/documents/doc/uow012245.pdf
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Publisher Info
Paper provided by School of Economics, University of Wollongong, NSW, Australia in its series Economics Working Papers with number wp98-01.

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Length: 6 pages
Date of creation: 1998
Date of revision:
Handle: RePEc:uow:depec1:wp98-01

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Postal: School of Economics, University of Wollongong, Northfields Avenue, Wollongong NSW 2522 Australia
Phone: +612 4221-3663
Fax: +612 4221-3725
Web page: http://www.uow.edu.au/commerce/econ/
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Related research
Keywords: RATIONAL EXPECTATIONS;

Find related papers by JEL classification:
D91 - Microeconomics - - Intertemporal Choice and Growth - - - Intertemporal Consumer Choice; Life Cycle Models and Saving

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  1. Chaloupka, Frank, 1991. "Rational Addictive Behavior and Cigarette Smoking," Journal of Political Economy, University of Chicago Press, vol. 99(4), pages 722-42, August. [Downloadable!] (restricted)
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  2. Orphanides, Athanasios & Zervos, David, 1995. "Rational Addiction with Learning and Regret," Journal of Political Economy, University of Chicago Press, vol. 103(4), pages 739-58, August. [Downloadable!] (restricted)
    Other versions:
  3. Douglas, Stratford, 1998. "The Duration of the Smoking Habit," Economic Inquiry, Oxford University Press, vol. 36(1), pages 49-64, January.
  4. Iannaccone, Laurence R., 1986. "Addiction and satiation," Economics Letters, Elsevier, vol. 21(1), pages 95-99. [Downloadable!] (restricted)
  5. Gary S. Becker & Michael Grossman & Kevin M. Murphy, 1994. "An Empirical Analysis of Cigarette Addiction," NBER Working Papers 3322, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  6. 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.
  7. Grossman, Michael & Chaloupka, Frank J & Sirtalan, Ismail, 1998. "An Empirical Analysis of Alcohol Addiction: Results from the Monitoring the Future Panels," Economic Inquiry, Oxford University Press, vol. 36(1), pages 39-48, January.
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  8. Olekalns, Nilss & Bardsley, Peter, 1996. "Rational Addiction to Caffeine: An Analysis of Coffee Consumption," Journal of Political Economy, University of Chicago Press, vol. 104(5), pages 1100-1104, October. [Downloadable!] (restricted)
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  9. Waters, Teresa M & Sloan, Frank A, 1995. "Why Do People Drink? Tests of the Rational Addiction Model," Applied Economics, Taylor and Francis Journals, vol. 27(8), pages 727-36, August.
  10. Becker, Gary S & Murphy, Kevin M, 1988. "A Theory of Rational Addiction," Journal of Political Economy, University of Chicago Press, vol. 96(4), pages 675-700, August. [Downloadable!] (restricted)
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