Damaged Goods: A resource depletion model of addictive consumption
Economic research on the consumption of harmful goods focuses principally on the addictive nature of consumption rather than its impacts on health, despite medical research showing that consumers primarily consider health effects when making decisions about addictive behaviour. In this paper, the standard rational addiction model is recast in terms of a resource depletion problem, where the resource in question is a depletable stock of health, and the time horizon is finite. Analysis of the prototype health depletion model finds two types of consumption path, one that is compatible with the results from rational addiction and one that is not. Several extensions to the prototype model are explored.
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