Working Paper: NBER ID: w9329
Authors: B. Douglas Bernheim; Antonio Rangel
Abstract: We propose an economic theory of addiction based on the premise that cognitive mechanisms such as attention affect behavior independently of preferences. We argue that the theory is consistent with foundational evidence (e.g. from neurosciencee and psychology) concerning the nature of decision-making and addiction. The model is analytically tractable, and it accounts for a broad range of stylized facts concerning addiction. It also generates a plausible qualitative mapping from the characteristics of substances into consumption patterns, thereby providing a basis for empirical tests. Finally, the theory provides a clear standard for evaluating social welfare, and it has a number of striking policy implications.
Keywords: No keywords provided
JEL Codes: D0; D1; D6; D9; H0; H2; H5; I0; I1; K1; K4
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| cognitive mechanisms such as attention (D91) | decision-making in addiction (D87) |
| environmental cues (O44) | hot cognitive mode (C54) |
| hot cognitive mode (C54) | consumption of addictive substances (I12) |
| past usage (R14) | current consumption (E20) |
| cue-conditioned cravings (D91) | compulsive usage (D10) |
| environmental changes (O44) | mitigate compulsive usage (D91) |
| cognitive processes (D91) | self-regulation failures (D91) |