Thursday, January 27, 2011

Tim Harford pokes fun at rational addiction

He twittered my rational addiction video late last year and includes it in a side post ( ), so maybe I can take a small crumb of credit for the idea? (His is much more accessible to non-economists, though...)

Amplify’d from

I wasn’t always an alcoholic tramp. I am a man of letters. I studied Philosophy, Politics and Economics at Oxford, like that David Cameron fellow. But when I looked at the options open to me – over-worked banker, castrated civil-servant or, worst of all, parliamentarian – I decided that the optimal course of affairs would be to begin building up my stock of addictive capital.

I don’t want to romanticise life as a rough-sleeping bum. It gets cold and lonely. I’m not sure what is keeping my underpants together, though I’m sure they wouldn’t survive contact with suds and warm water. But my boozy existence has a cool, calculating logic. I know that seems odd, but thankfully Gary Becker and Kevin Murphy, two of the University of Chicago’s most celebrated economists, have worked out the details in their theory of rational addiction.

For sure, not everything is perfect. But I’m a rational addict; a utility-maximising old soak. I drink because it makes sense to do so – by following an ex-ante optimal inter-temporal consumption plan, as they say. Speaking of which, let me crack open a bottle of strong cider … that’s better.


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