Related Literature on Cigarette Smoking

Journal of Health Economics 18 Ž1999. 1–29

An economic theory of cigarette addiction
Steven M. Suranovic a,) , Robert S. Goldfarb a , Thomas C. Leonard b a Department of Economics, The George Washington UniÕersity, 2201 G St. N.W., Washington, DC 20052, USA b Department of Economics, Princeton UniÕersity, Princeton, USA Received 1 July 1996; revised 1 March 1998; accepted 30 April 1998

Abstract In this paper we present a model in which individuals act in their own best interest, to explain many behaviors associated with cigarette addiction. There are two key features of the model. First, there is an explicit representation of the withdrawal effects experienced when smokers attempt to quit smoking. Second, there is explicit recognition that the negative effects of smoking generally appear late in an individual’s life. Among the things we use the model to explain are: Ž1. how individuals can become trapped in their decision to smoke; Ž2. the conditions under which cold-turkey quitting and gradual quitting may occur; and Ž3. a reason for the existence of quit-smoking treatments. q 1999 Elsevier Science B.V. All rights reserved.
JEL classification: I10; D11; D91 Keywords: Addiction; Smoking; Intertemporal choice; Habitual consumption

1. Introduction Economists model human behavior by assuming that individuals act in their own best interest. We describe agents as maximizing utility when they make rational choices consistent with their preferences, given their beliefs. Yet classes of widespread behaviors seem to prima facie contradict this assumption. Millions
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0167-6296r99r$ - see front matter q 1999 Elsevier Science B.V. All rights reserved. PII: S 0 1 6 7 - 6 2 9 6 Ž 9 8 . 0 0 0 3 7 - X

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S.M. SuranoÕic et al.r Journal of Health Economics 18 (1999) 1–29

of consumers smoke cigarettes, overindulge in food and drink, pay taxes too soon, procrastinate, and save or

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