A Theory of Relative Deprivation and Myopic Addiction

Myopic use of mind-altering substances is proposed to be equal to the product of the user’s current levels of relative-deprivation feeling and substance-tolerance. If initially this product is sufficiently large the user is trapped in a deprivation-use-addiction vicious cycle. There may be a relatively high addiction and socioeconomic position steady state and a relatively low one. If the users are initially located in the high steady state, an increase in treatment is clearly socially desirable. In contrast, the possible improvement of users’ socioeconomic position from increasing law-enforcement or socioeconomic opportunities might be dominated by a rise in users’ addiction level.Relative deprivation, myopia, substance abuse, addiction

Macroeconomic Aspects of Substance Abuse: Diffusion, Productivity and Optimal Control

This paper deals dynamically with macroeconomic aspects of widespread substance abuse with a reference to illicit drugs as an example. Substance-abuse impedes the productivity of the labour force and subsequently economic growth. The labour force is divided into non-using and therefore fully productive workers, a number of whom are employed by the government in drug-control activities, and drug users who are only partially productive. An efficient management of the nation's portfolio of workers is taken to be the trajectory of drug-control that maximises the present value of the stream of disposable national incomes.Substance abuse, labour productivity, national income, optimal control

On the Matthew effect on Individual Investments into Skills in Arts, Sports and Science

The paper describes the process of capital accumulation subject to the following characteristics: (i) convex returns to (human) capital; (ii) the need to self _nance the investment. This set up is applicable to explain some peculiarities in arts, sports and science, inter alia, the \Matthew effect" coined in Merton (1968) to explain why prominent researchers get disproportional credit for their work. The potential young artist's (or sportsman's or even scientist's) optimal strategies include quitting, or continuing and even expanding one's human capital in a profession. Both outcomes are separated by a threshold level in human capital. In addition, it can be optimal to stay in business although consumption falls and stays at the subsistence level (we call this outcome a \Sisyphus point")

The optimal lockdown intensity for COVID-19

One of the principal ways nations are responding to the COVID-19 pandemic is by lockingdown portions of their economies to reduce infectious spread. This is expensive in terms oflost jobs, lost economic productivity, and lost freedoms. So it is of interest to ask: What isthe optimal intensity with which to lockdown, and how should that intensity vary dynamicallyover the course of an epidemic? This paper explores such questions with an optimal controlmodel that recognizes the particular risks when infection rates surge beyond the healthcaresystem's capacity to deliver appropriate care. The analysis shows that four broad strategies canbe optimal, ranging from brief lockdowns that only \smooth the curve" to sustained lockdownsthat prevent infections from spiking beyond the healthcare system's capacity. Within this model,it can be optimal to have two separate periods of locking down, so returning to a lockdown afterinitial restrictions have been lifted is not necessarily a sign of failure. Relatively small changesin judgments about how to balance health and economic harms can alter dramatically whichstrategy is optimal. Indeed, there are constellations of parameters for which two or even three ofthese distinct strategies can all be optimal for the same set of initial conditions; these correspondto so-called triple Skiba points. The performance of trajectories can be highly nonlinear in thestate variables, such that for various times t, the optimal unemployment rate could be low,medium, or high, but not anywhere in between. These complex dynamics emerge naturally from modeling the COVID-19 epidemic and suggest a degree of humility in policy debates.Even people who share a common understanding of the problem's economics and epidemiologycan prefer dramatically di_erent policies. Conversely, favoring very di_erent policies is notevidence that there are fundamental disagreements

The War on Illegal Drug Production and Trafficking: An Economic Evaluation of Plan Colombia.

This paper provides a thorough economic evaluation of the anti-drug policies implemented in Colombia between 2000 and 2006 under the so-called Plan Colombia. The paper develops a game theory model of the war against illegal drugs in producer countries. We explicitly model illegal drug markets, which allows us to account for the feedback effects between policies and market outcomes that are potentially important when evaluating large scale policy interventions such as Plan Colombia. We use available data for the war on cocaine production and trafficking as well as outcomes from the cocaine markets to calibrate the parameters of the model. Using the results from the calibration we estimate important measures of the costs, effectiveness, and efficiency of the war on drugs in Colombia. Finally we carry out simulations in order to assess the impact of increases in the U.S. budget allocated to Plan Colombia, and find that a three-fold increase in the U.S. budget allocated to the war on drugs in Colombia would decrease the amount of cocaine that succesfully reaches consumer countries by about 17%.Hard drugs, conflict, war on drugs, Plan Colombia

Unintended Consequences of Cigarette Prohibition, Regulation, and Taxation

Abstract Laws that prohibit, regulate, or tax cigarettes can generate illicit markets for tobacco products. Illicit markets both reduce the efficacy of policies intended to improve public health and create harms of their own. Enforcement can reduce evasion but creates additional harms, including incarceration and violence. There is strong evidence that more enforcement in illicit drug markets can spur violence. The presence of licit substitutes, such as electronic cigarettes, has the potential to greatly reduce the size of illicit markets. We present a model demonstrating why enforcement can increase violence, show that states with higher tobacco taxes have larger illicit markets, and apply the findings to discussion of public policy toward a potential ban on menthol cigarettes. The social calculus involved in determining public policy toward tobacco cigarettes should include the harms from both consumption and control. We conclude by highlighting areas where more research is needed for effective policymaking

On the matthew effect on individual investments in skills in arts, sports and science

This paper describes the process of capital accumulation subject to the following characteristics: (i) convex returns to (human) capital and (ii) the need to self-finance investments. Our setup is applicable to some peculiarities in the arts, sports and science, inter alia, coined the Matthew effect in Merton (1968) and explains, e.g., why prominent researchers get disproportional credit for their work. The potential young artist’s (athlete’s or scientist’s) optimal strategies include quitting, or continuing and even expanding one’s human capital in the respective profession. Both outcomes are separated by a threshold level in human capital. In addition, we find that it can be optimal to stay in business although consumption falls and stays at the subsistence level forever (we call this outcome a Sisyphus point). This possibility is also interesting from a theoretical point-of-view, as the optimal control problem may turn abnormal, i.e., the objective does not enter the Hamiltonian

An Assessment of U.S. Drug Problems and Policy

This PDF document was made available from www.rand.org as a public service of the RAND Corporation. Jump down to document6 INTERNATIONAL AFFAIR

Engineering Incentives in Distributed Systems with Healthcare Applications

U.S. healthcare costs have experienced unsustainable growth, with expenditures of $2.5 trillion in 2009, and are rising at a rate faster than that of the U.S. economy. A major factor in the cost of the U.S. healthcare system is related to the strategic behavior of system participants based on their incentives. This dissertation addresses the challenge of designing incentives to solve problems in healthcare systems. Principal agent theory and Markov decision processes are the primary methods used to construct incentives. The first problem considered is how to design contracts in order to align consumer and provider incentives with respect to preventive efforts. The model consists of an insurer contracting with two agents, a consumer and a provider, and focuses on the trade off between ex ante moral hazard and insurance. Two classes of efforts on behalf of the provider are studied: those which complement consumer efforts, and those which substitute with consumer efforts. The results show that the provider must be given incentives when the consumer is healthy to induce effort, and that inducing provider effort allows an insurer to save on incentives given to the consumer. The insurer can save on the cost of incentives by using a multilateral contract compared to the bilateral benchmark. These savings are illustrated by an example showing which model features affect the savings achieved. The second problem addresses the decision to provide knowledge to consumers regarding the consequences of health behaviors. The model developed to address this second problem extends the literature on incentives in healthcare systems to consider dynamic environments and includes a behavioral model of healthcare consumers. By using a learning model of consumer behavior, a policy maker's knowledge provision problem is transformed into a Markov decision process. This framework is used to solve for optimal knowledge provision policies regarding behaviors affecting coronary health. Sensitivity analysis shows robust threshold features of optimal policies. The results show that knowledge about smoking should be provided at most health and behavior states. As the cost of providing knowledge increases or aptitude for behavioral change decreases, fewer states are in the optimal knowledge provision policy, with healthy consumers dropping out first. Knowledge about diet and physical activity is provided more selectively due to the to uncertainty in the health benefits, and the time delay in accrued rewards

Crystal Meth, Gay Men, and Circuit Parties

Excerpt Over the three decades since the advent of the gay civil rights movement, gay male subcultures in large cities have frequently maintained—as an integral and celebrated element of “gay ghetto” life—an intimate connection between recreational drug use, all-night dance parties, and sexual freedom (Browning, 1993; Kramer, 1978; Rotello, 1997; Shilts, 1987). Writing about 1970s New York, Levine (1998) called these cultural elements the “four Ds: disco, drugs, ‘dish’ and ‘dick’.” Although the onslaught of the AIDS epidemic in the 1980s forced a broad-based retrenchment in the more libertine aspects of these subcultures, a number of social forces in the 1990s brought the drug/ sex/dance scenes back with vigor. The most visible facet of this renewed revelry has been the circuit party, which, paradoxically, emerged from AIDS fundraising efforts initiated by the gay community in the early days of the epidemic (Kurtz, 1999; Signorile, 1997)