Addictive Consumption, Imperfect Substitutes and Self Control: A Model and an Application to Slot Machines

C Deiana, Davide Dragone and Ludovica Giua

Health, Econometrics and Data Group (HEDG) Working Papers from HEDG, c/o Department of Economics, University of York

Abstract: We propose a model of addictive consumption to study the demand for imperfect substitutes involving substances like alcohol, nicotine and opioids, as well as behavioral addictions like gambling and digital addiction. We study a 2017 Italian policy aimed at reducing gambling by limiting the number of available slot machines. Despite the reduction in slot machines, the policy produced an unintended 25% increase in net expenditure, particularly among low-wealth and low-educated individuals who also engage in other addictive behaviors. This result can be rationalized as the consequence of changes in self-control costs due to social contagion effects.

Keywords: addiction; gambling; horizontal differentiation; self-control; slot machines; temptation (search for similar items in EconPapers)
JEL-codes: I18 L43 L83 (search for similar items in EconPapers)
Date: 2024-12
New Economics Papers: this item is included in nep-hea and nep-pay
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Working Paper: Addictive Consumption, Imperfect Substitutes and Self Control: A Model and an Application to Slot Machines (2024)
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