A Theory of Rational Junk-Food Consumption

An expected lifetime-utility maximizing diet of junk and health food is analyzed. The stationary junk-food consumption level is equal to the ratio of the recovery capacity of a perfectly healthy person to the sensitivity of her health to junk food. The greater the difference between the relative taste and the stationary relative price of junk food, rate of time preference, and elasticity of satisfaction from food, the better the stationary health of the rational junk-food consumer. The greater the full capacity income, recovery capacity, and health sensitivity to junk-food, the worse the stationary health of the rational junkfood consumer.

Meat Demand under Rational Habit Persistence

The objective of this paper is to explore the theoretical implications of a meat demand model with rational habits. To introduce consumption dynamics, habit persistence is used to motivate intertemporally related preferences. The impact of food safety information on meat consumption is systematically analyzed. Important differences between myopic habits and rational habits are outlined.Demand and Price Analysis,

Heuristics for deciding collectively rational consumption behavior

We consider the computational problem of testing whether observed household consumption behavior satisfies the Collective Axiom of Revealed Preferences (CARP). We propose a graph such that the existence of a node-partitioning giving rise to two induced subgraphs that are acyclic implies that the data satisfy CARP. Furthermore, we propose and implement heuristics that are quite fast, that can be used to check reasonably large datasets for CARP and that can be of particular interest when used prior to computationally demanding approaches. Finally, from the computational results we conclude that these heuristics can be effective in testing CARP.Collective model of household consumption; Collective Axiom of Revealed Preference; Pareto efficiency; Directed graph; Graph coloring; Graph partitioning; Acycli subgraph; Heuristics.

OBESITY AND NUTRIENT CONSUMPTION: A RATIONAL ADDICTION?

This study tests for a rational addiction to food nutrients as a potential explanation for the obesity epidemic. A random coefficients (mixed) logit model applied to household scanner data finds evidence of a strong, forward-looking addiction to carbohydrates. Consequently, price-based policies may be effective in controlling excessive nutrient intake.Food Consumption/Nutrition/Food Safety,

An Empirical Analysis of Cigarette Addiction

We use a framework suggested by a model of rational addiction to analyze empirically the demand for cigarettes. The data consist of per capita cigarettes sales (in packs) annually by state for the period 1955 through 1985. The empirical results provide support for the implications of a rational addiction model that cross price effects are negative (consumption in different periods are complements), that long-run price responses exceed short-run responses, and that permanent price effects exceed temporary price effects. A 10 percent permanent increase in the price of cigarettes reduces current consumption by 4 percent in the short run and by 7.5 percent in the long run. In contrast, a 10 percent increase in the price for only one period decreases consumption by only 3 percent. In addition, a one period price increase of 10 percent reduces consumption in the previous period by approximately .7 percent and consumption in the subsequent period by 1.5 percent. These estimates illustrate the importance of the intertemporal linkages in cigarette demand implied by rational addictive behavior.

Obesity and Nutrient Consumption: A Rational Addiction?

Widespread obesity in the U.S. is a relatively recent phenomenon, reaching epidemic proportions only in the last 15 years. However, existing research shows that while calorie expenditure through physical activity has not changed appreciably since 1980, calorie consumption has risen dramatically. Consequently, any explanation of obesity must address the reason why consumers tend to overeat in spite of somewhat obvious future health implications. This study tests for an addiction to food nutrients as a potential explanation for the obesity epidemic. Specifically, we use a random coefficients (mixed) logit model applied to household scanner data to test a multivariate version of the rational addiction model of Becker and Murphy and Chaloupka. We find evidence of a rational addiction to all nutrients protein, fat and carbohydrates as well as to sodium, but particularly strong evidence of a forward-looking addiction to carbohydrates. The implication of this finding is that price-based policies sin taxes or produce subsidies that change the expected future costs and benefits of consuming carbohydrate-intensive foods may be effective in controlling excessive nutrient intake.addiction, demand, mixed logit, nutrients, obesity., Food Consumption/Nutrition/Food Safety,

Consumption

Macroeconomic research on consumption has been influenced profoundly by rational expectations. First, rational expectations together with the hypothesis of constant expected real interest rates implies that consumption should evolve as a random walk. Much of the research of the past decade has been devoted to testing the random walk hypothesis and to explaining its failure. Three branches of the literature have developed. The first relies on the durability of consumption to explain deviations from the random walk property. The second invokes liquidity constraints which block consumers from the credit market transactions needed to make consumption follow a random walk when income fluctuates up and down. The third branch dispenses with the assumption that expected real interest rates are constant. It attempts to explain deviations from the random walk in terms of intertemporal substitution.

Rationally Addicted to Cigarettes, Alcohol and Coffee? A Pseudo Panel Approach

In this paper, using pseudo panel data we analyze the relation between cigarette, alcohol, and coffee consumption within the rational addiction framework. Our purpose in this study is twofold. First, we want to get more insights about behavioral processes concerning cigarette, alcohol and coffee consumption. Second, we hope that our attempt to generalize rational addiction model to include three addictive goods will be useful to generate further research in the related literature. We found that cross price elasticity of cigarette with respect to alcohol price is negative, while cross price elasticity of alcohol with respect to cigarette price is positive. We believe that drinking works as a trigger for smoking especially in social settings like bars while it is also possible that people who want to cut cigarette consumption might increase alcohol consumption to cope with resulting stress, which induces an asymmetry in cross price elasticities. We did not find a strong relation between coffee consumption and the consumption of cigarette and alcohol. This finding does not rule out the possibility that coffee and cigarette are complements for certain people. However there is not a significant complementarity relationship when we look at the whole population.cigarette, alcohol, coffee, rational addiction, pseudo panel, Demand and Price Analysis,

The Interaction between Alcohol and Cigarette Consumption

It has long been recognized that cigarette and alcohol not only have adverse health effects, but also negative externalities imposed on third parties. If cigarette and alcohol are related in consumption, the information on the way in which they are related may allow a better coordination of the public policies concerning these goods. In this study, we use the expenditure data of a panel of US households to analyze the relation between cigarette and alcohol consumption in a rational addiction framework. We believe that individual level data would be a better tool to analyze addictive behavior as aggregate data might conceal much of micro behavior. We found that cigarettes and alcoholic beverages are substitutes. However, both cigarette and alcohol demand do not fit the rational addiction model so well.rational addiction, panel data, cigarette consumption, alcohol consumption, Demand and Price Analysis,

Does the Behaviour of Myopic Addicts Support the Rational Addiction model?: A Simulation

Becker and Murphy (1988) constructed, in a well-known paper, a model of rational addiction in which people solve a dynamic optimization problem, choose an optimal timepath of drug consumption and thereby maximize lifetime utility. The model leads to the hypothesis that future consumption is a significant explanatory variable for present consumption. This paper briefly surveys the empirical studies which provide support for this hypothesis. Most of the authors claim to have found support for the Becker-Murphy model. However, this paper will show that it is possible to obtain qualitatively the same results for the consumption patterns of myopic addicts. To this end, an economy is simulated in which everyone behaves according to Pollak's (1970) paradigmatic alternative to the model of rational addiction.rational addiction, instrumental variables