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Addictive Consumption, Imperfect Substitutes and Self Control: A Model and an Application to Slot Machines

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  • Deiana, C
  • Dragone, D
  • Giua, L

Abstract

We propose a model of addictive consumption to study the demand for imperfect substitutes involving substances like alcohol, nicotine and opioids, as well as behavioral addictions like gambling and digital addiction. We study a 2017 Italian policy aimed at reducing gambling by limiting the number of available slot machines. Despite the reduction in slot machines, the policy produced an unintended 25% increase in net expenditure, particularly among low-wealth and low-educated individuals who also engage in other addictive behaviors. This result can be rationalized as the consequence of changes in self-control costs due to social contagion effects.

Suggested Citation

  • Deiana, C & Dragone, D & Giua, L, 2024. "Addictive Consumption, Imperfect Substitutes and Self Control: A Model and an Application to Slot Machines," Health, Econometrics and Data Group (HEDG) Working Papers 24/21, HEDG, c/o Department of Economics, University of York.
    • Handle: RePEc:yor:hectdg:24/21
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    More about this item

    Keywords

    addiction; gambling; horizontal differentiation; self-control; slot machines; temptation;
    All these keywords.

    JEL classification:

    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • L43 - Industrial Organization - - Antitrust Issues and Policies - - - Legal Monopolies and Regulation or Deregulation
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism

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