The Economics of AddictionIs it possible that heroin junkies and crackheads are actually rational?
Posted Saturday, Aug. 4, 2007, at 8:15 AM ETI 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.
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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.
Even other economists are skeptical. "They don't know what they're talking about," opined Thomas Schelling when I met him shortly after he, too, was awarded the Nobel Memorial Prize in Economic Sciences. Schelling had spent years trying to kick his tobacco addiction.
Yet perhaps the rational addiction approach is not quite as absurd as it seems. Some habits are rational to acquire. Dating my girlfriend was habit-forming enough to ask her to be my wife. So far, I have no regrets.
It seems absurd to compare the decision to drink coffee or start dating with the decision to smoke cigarettes or inject heroin, but if Becker and Murphy are right, the difference is not of kind but of degree.
Rational addicts should behave in certain ways. They should, for instance, respond not just to current price increases but to expected future price hikes. If heroin is likely to get more expensive, rational addicts should consider trying to quit before that happens. Addicts may even be more sensitive to lasting price shifts than nonaddicts. And since addiction is self-reinforcing, when the rational addict wants to quit, cold turkey is the efficient way to do it.
Economists have found some evidence to support these ideas: Pamela Mobilia finds that betting at racetracks falls in anticipation of increases in bookies' takings; Nilss Olekalns and Peter Bardsley find that coffee addicts show similar foresight; Philip Cook and George Tauchen found that when some U.S. counties raised taxes on alcohol, liver cirrhosis fell more sharply than overall consumption, suggesting that it was the alcoholics who cut back most.
My own addiction was perfectly rational: I am working on a new book, and as deadlines loomed, I drank more and more coffee, even though I was becoming dependent on the caffeine. Manuscript submitted, I went cold turkey on holiday, knowing that the headaches and sluggishness of mind would be both less painful and less important while wandering around the Welsh coast.
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Remarks from the Fray:
I saw the real world of addiction when a close friend ended up in a drug treatment program. The counselors there had a great definition for addiction - addiction is when something (drugs, tv, sex, coffee…) has consistent harmful impact on your life or the lives of those around you.
I like this definition because it is in terms of observables that matter. People (especially undiagnosed addicts) are masters of self deception. Losing a job, beating your wife, not paying the bills are much easier for everyone to agree on than the addict's opinion about whether or not they have a physical dependency.
If you consider harming yourself or others irrational, then by definition addiction is irrational.
--cwurld
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Addictive drugs release chemicals called endorphins, which stimulate the pleasure centers of the brain. Your body also naturally releases endorphins, which is what you get when your mom cooks apple pie, or you hug your girlfriend, or get a bonus from your boss for finishing the big project. However, drugs release huge amounts of endorphins in a short time, resulting a "high" which pretty well eclipses any natural source.
If we simply substitute endorphins for money, a cost-benefit analysis would show that a drug high is much greater benefit, proportional to cost, than normal activities, so in these terms, hard drugs are a rational choice. The choice only become irrational when one considers long-term costs:
--Faustling
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If a person can easily quit something, they were never really addicted, right? Isn't an addiction much more than a mere habit? And isn't the habit in question required to have a negative influence and seriously interfere with an individual's life before we can call it true addiction?
It bothered me that the author seems to lump decisions, habits and addictions together... using a study on horsetrack betting to somehow equate with studies on "junkies and crackheads". I missed the point entirely. Withdrawal from caffeine is absolutely no comparison to what a person withdrawing from heavy alcohol use or heroin abuse experiences. Withdrawing without medical intervention can be deadly under some circumstances. Not a headache or feelings of sluggishness. The detox process can be a dangerous ordeal. And, as we all know, rehab treatment doesn't always work for a multitude of reasons...the whole relapse issue and cyclical nature of addiction are important aspects to mention in a discussion of this kind.
I can't seem to place this particular human behavior in an economic model. It just won't fit. I don't find a hidden logic or gain any understanding. Only more questions. Why would somebody choose addiction? What is the benefit? Is addictive behavior a means to an end? I can only see it as slow suicide. And that certainly isn't playing the game rationally in my rule book.
--mojo5501
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I have another rational theory of addiction. Addiction is a rational response to early, but false, indications of efficacy. An addict is someone who finds a source for something that seems to be low cost, low risk. Unfortunately, the satisfaction is illusory and the need for that same something increases. So does consumption. Soon the source of authentic satisfaction is out of reach and the addiction appears to be the only route to fill the need. Thus, crisis.
--BenK
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Why would only addicts reduce use in the face of a liquor tax? Could it be that they could afford less? Since overall consumption did not decrease at the same rate as liver cirrhosis, it would appear rationalism does not dictate use.
--spruce
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When I was addicted to cigarettes, from age 16 to 32 the ever-rising cost of cigarettes didn't phase me. I kept buying, even conniving ways to buy cartons from sales-tax-free New Hampshire, and I kept smoking my brains out....until - so until - it hurt my neck to bend it, it was hard to breathe on a humid summer day, my gums were running away from my teeth and this pain behind my upper left shoulder blade just wouldn't go away.
Would you call it rational to have decided to quit? Or would you call it scared as hell? I'm so glad I did find a way to knock it off, but I wouldn't say my decision was because I somehow deduced that smoking in my life wasn't needed anymore. I think it was because I was terrified.
If making a decision due to "terrification" is rational, then I was one mighty rational soul.
--Dana
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