Rational addiction is the hypothesis that addictions can be usefully modeled as specific kinds of rational, forward-looking, optimal consumption plans. The canonical theory comes from work done by Kevin M. Murphy and Gary S. Becker. A theory of addictions in the broad sense—for example, to heroin, tobacco, religion, or food—the article tried to reconcile addictions with the standard rational choice framework of modern economics.
Though controversial, this theoretical approach has become "one of the standard models in the literature on addictive behavior" in economics, and a variety of extensions and modifications have been developed and published by other authors over the years. A survey of researchers who had authored or co-authored peer-reviewed articles on rational addiction theory indicates that the researchers see the theories as successful in a number of ways: 73% of the respondents see them as extending and enriching consumer theory, 56% see them as containing relevant insights on the welfare effects of addictive goods and public policies towards these, 44% see them as providing useful tools for predicting aggregate consumption behavior, 39% see them as providing insights into how addicts choose that are relevant for treatment professionals, and 27% see them as providing evidence that addictions are actually a sequence of rational, welfare maximizing choices.
The Becker and Murphy (1988) model
The original theory models addictions as the implementation of a forward-looking consumption plan made under full certainty and perfect information, where the individual is entirely committed toward maximizing utility. Addiction is defined in a non-physiological sense as a causal effect of past consumption on current consumption, so that addictiveness is specific to individuals. The addict knows exactly how the good will affect him, and the reason he consumes more and more ("gets hooked") is that this is the pattern of consumption that maximizes his discounted utility. He knows that consuming the addictive good will change his preferences, altering both his future baseline level of utility and the marginal utility of consuming the addictive good in the future.
A sizeable econometric literature has developed on rational addiction, often reporting evidence in favor of rational addiction. For example, Gruber and Koszegi (2001) show that the model's prediction that announced future tax increases should decrease current smoking is consistent with the evidence. Auld and Grootendorst (2004) show, however, that the empirical version of the rational addiction model tends to produce spurious evidence of addictiveness when aggregate data are used.
Criticism of rational addiction theories have emerged along different lines. One strand of criticism is the already mentioned econometric work. A prominent critic working along different lines is the philosopher Jon Elster who in a series of works has claimed that theories in Becker's framework are conceptually incoherent in their view of preferences, as well as inconsistent with the ambivalence and desire for increased self-regulation that is empirically displayed by many addicts. Economist Ole Rogeberg has used the theories as a case example of what he calls "absurd theories" in economics, and argues that the theories "illustrate how absurd choice theories in economics get taken seriously as possibly true explanations and tools for welfare analysis despite being poorly interpreted, empirically unfalsifiable, and based on wildly inaccurate assumptions selectively justified by ad hoc stories."
- Becker, G. and K. Murphy (1988) "A theory of rational addiction". Journal of Political Economy, 96, 675-700.
- Ferguson, Brian S. (2000) "Interpreting the rational addiction model". Health Economics, Vol. 9: Iss. 7, pp. 587-598, http://onlinelibrary.wiley.com/doi/10.1002/1099-1050(200010)9:7%3C587::AID-HEC538%3E3.0.CO;2-J/abstract
- Melberg, H. O. and O. J. Rogeberg (2010) "Rational Addiction Theory: A Survey of Opinions". Journal of Drug Policy Analysis, Vol. 3: Iss. 1, Article 5, http://www.bepress.com/jdpa/vol3/iss1/art5/
- Gruber, J. and B. Koszegi (2001) "Is addiction rational? Theory and evidence". Quarterly Journal of Economics 116: 4 1261-303.
- Auld, M.C. and P. Grootendorst (2004) "An empirical analysis of milk addiction". Journal of Health Economics, 23, 1117-33.
- Elster, Jon (1997). "More Than Enough: Review of Accounting for Tastes". University of Chicago Law Review. 64 (2): 749–764. doi:10.2307/1600295. JSTOR 1600295.
- Elster, Jon (2000). Alchemies of the Mind: Rationality and the Emotions. Cambridge University Press.
- Rogeberg, Ole (2004). "Taking Absurd Theories Seriously: Economics and the Case of Rational Addiction Theories". Philosophy of Science. 71 (3): 263–285. doi:10.1086/421535. JSTOR 421535.
- Hidayat, B; Thabrany, H (2011). "Are smokers rational addicts? Empirical evidence from the Indonesian Family Life Survey". Harm Reduction Journal. 8: 6. doi:10.1186/1477-7517-8-6. PMC 3050689. PMID 21345229.
- Baltagi, B. H.; Geishecker, I (2006). "Rational alcohol addiction: Evidence from the Russian longitudinal monitoring survey". Health Economics (Submitted manuscript). 15 (9): 893–914. doi:10.1002/hec.1131. PMID 16786501.
- Sloan, F. A.; Wang, Y (2008). "Economic theory and evidence on smoking behavior of adults". Addiction. 103 (11): 1777–85. doi:10.1111/j.1360-0443.2008.02329.x. PMID 18778387.