A Theory of Rational Addiction

  title={A Theory of Rational Addiction},
  author={Gary Stanley Becker and Kevin M. Murphy},
  journal={Journal of Political Economy},
  pages={675 - 700}
We develop a theory of rational addiction in which rationality means a consistent plan to maximize utility over time. Strong addiction to a good requires a big effect of past consumption of the good on current consumption. Such powerful complementarities cause some steady states to be unstable. They are an important part of our analysis because even small deviations from the consumption at an unstable steady state can lead to large cumulative rises over time in addictive consumption or to rapid… 
An Extended Theory of Rational Addiction
This study extends the rational addiction theory by introducing an endogenous discounting of future utilities. The discount rate depends on habits accumulating over time because of the repeated
Rational Addiction with Learning and Regret
We present a theory of rational behavior in which individuals maximize a set of stable preferences over goods with unknown addictive power. The theory is based on three fundamental postulates: that
The theory of Rational Addiction.
The Theory of Rational Addictions, by Gary Becker & Kevin Murphy (1988), was a rational choice model that became a standard tool for economists modeling addictive behavior and its ability to assess the welfare effects of addictions is dismissed.
A Survey of Economic Models of Addictive Behavior
In economic analyses of addictive behavior, the consumption of a certain good is termed to be an addiction if an increase in past consumption of the good leads to an increase in current consumption.
Rational Addiction and Tobacco Consumption: Theory and Empirical Evidence
Since the end of the eighties the Becker and Murphy model of rational addiction has been the dominant approach to estimate addiction effects. A rational addictive consumer, a smoker for instance, is
Heroin Control Policy Under the Theory of Rational Addiction Frank
The theory of rational addiction suggests that demand for addictive goods is more sensitive to changes in the full cost of consuming those goods than has previously been believed. The theory thus
Rational Choice with Passion: Virtue in a Model of Rational Addiction
By incorporating a divided self into the rational addiction framework, this paper provides a rationale for and an explicit analysis of two types of budget-shrinking behaviors - actions taken to limit
An Economic Model of the Stages of Addictive Behavior
The aim of this research is to build a realistic model of addictive behavior by assuming that agents have bounded rationality. They make consumption decisions for the present period, taking into
A Theory of Natural Addiction
The empirical validity of this thesis is demonstrated with an in-depth review and synthesis of the biomedical literature concerning the action of opiates in the mammalian brain and their effects on behavior, which lends credence to many of the unconventional behavioral assumptions employed by theories of rational addiction.


Habit Formation and Dynamic Demand Functions
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    Journal of Political Economy
  • 1970
Most economists would agree that past consumption patterns are an important determinant of present consumption patterns, and that one ought to distinguish between long-run and short-run demand
The Effect of Liquor Taxes on Heavy Drinking
In this article we present the strongest evidence to date that chronic heavy drinkers' consumption is responsive to changes in the price of liquor. We estimate that an increase in the liquor excise
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Governmental Regulation of Cigarette Health Information and Consumer Protection Regulation: A Conference sponsored by the Center for the Study of the Economy and the State.
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Preface to the revised edition Preface and acknowledgements Part I. Perfect Rationality: Beyond Gradient-Climbing: 1. Introduction 2. The locally maximizing machine 3. The globally maximizing machine
Applied consumption analysis
Statics. Utility Functions. Demand Functions: Particular Restrictions. Empirical Implementations. Cost-of-Living Indices. Dynamics. Dynamic Single-Equation Models. Dynamic Demand Systems.
More than enough.
  • Mark.
  • History, Philosophy
  • 1970
The reading of the first ten verses of the gospel of John, where Jesus here speaks of the “abundant” life, focuses on the abundance of God.