Alcohol myopia and choice
The aim of this paper is to develop a model that explains how the consumption of some addictive substances affects individualsâ€™ choices and especially how it affects individualsâ€™ risk taking. We do this by assuming that some addictives substances, specifically alcohol, increase individualsâ€™ discount of the future. As individuals that consume alcohol show greater preference for the present and less for the future, they would find choices with rewards in the present and costs in the future more attractive. Therefore, an individual that wouldnâ€™t have accepted an option may do so after consuming alcohol and he/she may regret his/her decision after the alcohol in his/her blood is eliminated. We analyze the effect of two taxes in the welfare of individuals that face an attractive but harmful choice: a tax on the consumption of alcohol and a tax (or penalty) if the future costs of the choice are realized.
Volume (Year): 10 (2013)
Issue (Month): 2 (Julio - Diciembre)
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References listed on IDEAS
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- Matthew Rabin & Ted O'Donoghue, 1999.
"Doing It Now or Later,"
American Economic Review,
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- Ted O'Donoghue and Matthew Rabin ., 1997. "Doing It Now or Later," Economics Working Papers 97-253, University of California at Berkeley.
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- 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.
- Gruber, Jonathan & Koszegi, Botond, 2004. "Tax incidence when individuals are time-inconsistent: the case of cigarette excise taxes," Journal of Public Economics, Elsevier, vol. 88(9-10), pages 1959-1987, August.
- B. Douglas Bernheim & Antonio Rangel, 2004. "Addiction and Cue-Triggered Decision Processes," American Economic Review, American Economic Association, vol. 94(5), pages 1558-1590, December. Full references (including those not matched with items on IDEAS)
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