Life-Expectancy Augmented Rational Addition: A Note
AbstractThe 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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Bibliographic InfoPaper provided by School of Economics, University of Wollongong, NSW, Australia in its series Economics Working Papers with number wp98-01.
Length: 6 pages
Date of creation: 1998
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Find related papers by JEL classification:
- D91 - Microeconomics - - Intertemporal Choice - - - Intertemporal Household Choice; Life Cycle Models and Saving
This paper has been announced in the following NEP Reports:
- NEP-ALL-2002-04-03 (All new papers)
- NEP-HEA-2002-04-03 (Health Economics)
- NEP-MIC-2002-04-03 (Microeconomics)
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