Module 3: “Personal Capital: Addictive behavior”

Part 1: Reinforcement, tolerance and withdrawal

Isolate the main characteristics of addictive behavior. How can we model that? can we draw any implication?

  • Watch this video and reflect on why people start to be addicted to drugs? Is this rational? Are they hooked?
  • Grossman, M. (1995). The economic approach to addictive behavior. Chapter 10 in The new economics of human behaviour, pp. 157-171.
  • Lecture: video and slides.

Part 2: Theory of Rational Addiction

The importance of having teastable research question to guide empirical work.

  • Cawley, J., & Ruhm, C. J. (2011). The economics of risky health behaviors. In Handbook of health economics (Vol. 2). Chapter 3, section 2.3 and 2.4 pp. 112-126.
  • Rogeberg, O. (2020). The theory of rational addiction. Addiction.
  • Lecture: video and slides.

Part 3: Habits, addictions and traditions

Weak addictions: habits. Where habits come from? Peers, childhood and traditions.

  • Becker, G. S. (1998). Accounting for tastes. Chapter 6, pp. 118-138.
  • Lecture: video and slides.

Part 4: It is incentive, stupid!

Apply economic reasoning to a specific problem. Understand, model, predict.

Exercise: Positive addiction: running.