Rational addiction and time-consistency: An empirical test

Luca Piccoli and Silvia Tiezzi

Journal of Health Economics, 2021, vol. 80, issue C

Abstract: This paper addresses one of the main empirical problems associated with rational addiction theory, namely, that its derived demand equation is not empirically distinguishable from those of models with forward-looking behavior but with time-inconsistent preferences. Using an encompassing general specification of the rational addiction model we derive a microfounded test of time-consistency. The test allows us to distinguish between time-consistent versus time-inconsistent naïve agents. The results obtained from a panel of Russian individuals conform to the theoretical predictions of the rational addiction model and the proposed test for time-consistency does not reject the hypothesis that Russian cigarette consumers are time-consistent.

Keywords: Rational addiction; General versus standard specification; Time-consistency; Naïvete; GMM (search for similar items in EconPapers)
JEL-codes: C23 D03 D12 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0167629621001314
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Rational Addiction and Time Consistency: An Empirical Test (2020)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jhecon:v:80:y:2021:i:c:s0167629621001314

DOI: 10.1016/j.jhealeco.2021.102546

Access Statistics for this article

Journal of Health Economics is currently edited by J. P. Newhouse, A. J. Culyer, R. Frank, K. Claxton and T. McGuire

More articles in Journal of Health Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().