The Economics Of Addiction

Tim Harford writes for Slate:

I feel that it is time to share a secret. When I left on my vacation just over a week ago, I was fighting a battle with a deep-rooted addiction. I feel able to admit this, since over the course of my holiday I was able to go through cold turkey, conquer the addiction, and face the world clean.

It’s decaffeinated coffee for me from now on.

Addiction—even to something as benign as filter coffee—is an unlikely topic for an economist to tackle, because most economic theory is predicated on rational behavior, and addiction seems to be quintessentially irrational.

The logical response appeared in 1988. "A Theory of Rational Addiction" was published by Kevin M. Murphy and Nobel laureate Gary Becker, and has defined economists’ approaches to addiction ever since. The theory is easy to state: Addicts choose their poison despite knowing that it is habit-forming and dangerous, and they do so because they expect the highs to outweigh the lows.

About Luke Ford

I've written five books (see Amazon.com). My work has been covered in the New York Times, the Los Angeles Times, and on 60 Minutes. I teach Alexander Technique in Beverly Hills (Alexander90210.com).
This entry was posted in Economics. Bookmark the permalink.