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Economic Man and the Consumption of Addictive Goods: The Case of Two Goods

Author

Listed:
  • Andersson, Linda

    () (Department of Economics, Umeå University)

  • Bask, Mikael

    () (Department of Economics, Umeå University)

  • Melkersson, Maria

    () (Swedish Institute for Growth Policy Studies, SE 831 40 Östersund, Sweden)

Abstract

It is well-known that cigarette smoking and the use of other addictive goods is harmful to health. Still, some people smoke cigarettes and drink alcohol in their daily life. The consumption of addictive goods seems, therefore, to be the anti-thesis of rational behavior. In this paper, however, it is demonstrated that a rational individual, in the sense that he maximizes his well-being while anticipating the future consequences of his choices, may in fact choose to consume addictive goods. Specifically, the two-good extension of the rational addiction model is demonstrated and related to relevant policy questions. For instance, should one encourage the use of smokeless tobacco in smoking cessation programs? According to the empirical results, the answer is no. Further, should one discourage smoking by increasing the tax on cigarettes? Again, the answer is no.

Suggested Citation

  • Andersson, Linda & Bask, Mikael & Melkersson, Maria, 2003. "Economic Man and the Consumption of Addictive Goods: The Case of Two Goods," Umeå Economic Studies 615, Umeå University, Department of Economics.
  • Handle: RePEc:hhs:umnees:0615
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    File URL: http://www.econ.umu.se/DownloadAsset.action?contentId=62397&languageId=3&assetKey=ues615
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    Cited by:

    1. Pierpaolo Pierani & Silvia Tiezzi, 2009. "Addiction and interaction between alcohol and tobacco consumption," Empirical Economics, Springer, vol. 37(1), pages 1-23, September.

    More about this item

    Keywords

    Alcohol; Bootlegging; Cigarette Smoking; Complements; Rational addiction; Substitutes.;

    JEL classification:

    • I10 - Health, Education, and Welfare - - Health - - - General

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