Paul Contoyannis and Andrew M. Jones
This chapter focuses on two related areas in the economics of addiction. First, it considers how economists have characterized addiction, noting the relationship between these specifications and the characterizations offered by pharmacology and psychology. Second, it outlines the implications of alternative addiction models for the empirical analysis of the determinants of quitting. It should be noted throughout that while our focus is the problem of nicotine dependence, the general approaches and issues outlined are also applicable to other harmful, and possibly beneficial, addictions.
To put the economic approach into perspective, it is important to be aware of the pharmacology and psychology of addiction. Useful sources are Ashton and Stepney (1982) and Kuhn et al. (1998). Kuhn et al. offer the following definition of addiction: ‘addiction is the repetitive, compulsive use of a substance that occurs despite negative consequences of use’. From this perspective, physiological and psychological dependence entails not just the repetition of past behaviour, but also the compulsion to continue despite the harm that continued consumption inflicts on the drug user. Nicotine dependence is associated with three key features of addiction: reinforcement, tolerance, and withdrawal.
The desire for repetitive consumption can be understood in terms of the phenomenon of reinforcement: ‘In the language of psychology a reinforcer is something that motivates an individual to work towards getting more’ (Kuhn et al., 1998, p. 154). In other words, experience of consumption means that the user will be willing to make sacrifices (for instance, be willing to pay) to repeat the experience. This process works through the basic reward circuit of the central nervous system which, in turn, controls the circulatory, respiratory, and reflex systems: ‘Drugs that are truly addictive (stimulants, opiates, alcohol, nicotine) can actually substitute for food, sex or other primary reinforcers’ (Kuhn et al., 1998, p. 244). Furthermore, as everyone has this basic reward circuit, this is ‘true of everyone who has a brain’.
Tolerance describes the way in which the body adapts to taking a drug. For most drugs, tolerance is more likely to develop the more frequently the drug is consumed and the higher the dose. In the case of nicotine, tolerance corresponds