Rational addiction and cultural goods: the case of the Italian theatregoer

This paper tests whether demand for theatre in Italy is consistent with the model of rational addiction presented in Becker and Murphy (1988). Data from a novel 34-¬year panel on regional annual theatre attendance are used to estimate market demand. Four models are applied to investigate the demand function, and all of these also include per capita income and other control variables as regressors. The first two models are estimated to check whether theatregoers are myopically addicted to theatre. The results suggest that the theatre is an addictive good because past consumption (and prices) significantly raises the marginal utility of current consumption. The third model tests the rational addiction hypothesis, which assumes that future attendance also influences current attendance, whilst past and future prices influences current attendance only indirectly through their impact on past and future attendance. However, our most highly specified model, introducing past and future prices, demonstrates that Italian theatregoers are not myopic but fully rational as outlined in Becker and Murphy (1988). The results demonstrate that the rational addiction hypothesis is applicable not only to “harmful†addictions such as alcohol, cigarettes, and drug consumption, but also to “beneficial†addictions, such as theatre attendance.