Four explanations. Which ones survive rational addiction?
These are your original poll answers. Click any claim to uncover what Becker–Murphy would challenge.
THE CASE IS OPEN
Choose one of the four claims above.
See why the rational addiction model challenges it — or builds on it.
Our investigation: Can addictive consumption be forward-looking — and responsive to prices?
Same drinking history. Two very different effects.
TOLERANCE · SAME DRINK, LESS SATISFACTION
Imagine the same two drinks on two different days. After a long history of drinking, they may no longer deliver the same overall satisfaction: dependence, withdrawal or harm can make the experience worse. More stock, lower utility at the same consumption.
Now ask a different question: how much better is a third drink than stopping at two? With a larger stock, that extra drink may relieve a stronger craving or withdrawal discomfort. So the extra benefit of drinking more increases.
Keep the extra drink the same; increase accumulated stock. Its marginal benefit rises: UcS > 0.
EXPERIMENT · CHANGE PAST DRINKING
Move the stock slider: compare two drinks with the extra benefit of a third.
Stock S = 3
UTILITY FROM TWO UNITS
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Tolerance: this falls as stock grows.
EXTRA UTILITY FROM A THIRD UNIT
—
Reinforcement: this rises as stock grows.
Illustrative utility values, not measured pleasure. The two measures answer different questions: utility at a fixed quantity, and the added benefit of one more unit.
How can today's drinking keep yesterday's dependence alive?
Ṡ = c − δS
Change in addictive stock = new consumption − natural depreciation of existing stock
Start here: stock S = 5. Suppose 60% of the stock depreciates per period (δ = 0.6). So 3 units disappear unless replaced by consumption.
CHANGE IN STOCK
Ṡ = 0
Consumption replaces exactly what depreciates.
WHAT HAPPENS NEXT?
STEADY
At this starting stock, the replacement amount is c = δS = 3.
On the diagram: above c = δS, stock grows; below it, stock falls. On the line, stock is unchanged. The line is not a demand curve.
Two equilibria. One dangerous tipping point.
REVEAL THE ECONOMICS
First reveal the line where stock is constant.
WHY TWO EQUILIBRIA?
At E₁, a small change in stock can amplify. Below it, consumption falls short of replacement; above it, stock can grow towards E₂.
The shock changes the reason to drink; subsequent consumption changes the accumulated stock.
RUN THE INVESTIGATION
Select Apply shock to begin.
LIVE STOCK MOVEMENT
S = 1.45 · Ṡ = 0
A₁c = δSE₁E₂After-price consumption
Does addiction make demand perfectly price-inelastic?
THE POPULAR STORY
“An addict will pay anything.”
If demand were perfectly price-inelastic, a price rise would leave the quantity consumed unchanged.
THE RATIONAL ADDICTION CHALLENGE
If drinking becomes more expensive, someone who cuts back now also builds up less dependence. That can make cutting back again tomorrow easier.
So a lasting price increase can reduce consumption twice: first directly through price, then indirectly through a falling addictive stock.
Careful: A vertical move in our stock–consumption diagram holds stock fixed while consumption changes. It is not a vertical price–quantity demand curve and does not imply price inelasticity.
The unexpected prediction: might addicted users respond MORE to higher prices?
OCCASIONAL DRINKER
Price rises.
Drinking becomes more expensive, so consumption may fall.
One main effect: higher price → less drinking.
DEPENDENT DRINKER
A chain reaction.
A lasting price increase can reduce drinking today. That lowers the addictive stock, weakening the incentive to drink tomorrow.
Two linked effects: higher price → less drinking → lower stock → even less drinking.
Becker–Murphy's provocative possibility: dependent consumers may respond more strongly over time to a lasting price increase than occasional consumers. Not always — it depends on how strongly past drinking shapes future drinking.
The next test: does real behaviour match this prediction, or do craving, uncertainty and pressure break it?