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

Listed author(s):
  • 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)

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.

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Paper provided by Umeå University, Department of Economics in its series Umeå Economic Studies with number 615.

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Length: 15 pages
Date of creation: 07 Oct 2003
Handle: RePEc:hhs:umnees:0615
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Department of Economics, Umeå University, S-901 87 Umeå, Sweden

Phone: 090 - 786 61 42
Fax: 090 - 77 23 02
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