An economic analysis of addictive behavior: The case of gambling.
Item
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Title
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An economic analysis of addictive behavior: The case of gambling.
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Identifier
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AAI9108150
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identifier
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9108150
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Creator
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Mobilia, Pamela.
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Contributor
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Adviser: Michael Grossman
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Date
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1990
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Language
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English
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Publisher
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City University of New York.
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Subject
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Economics, General | Sociology, Social Structure and Development | Sociology, Criminology and Penology | Psychology, Personality
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Abstract
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This dissertation applies a theoretical model of rational addictive behavior to gambling and tests the hypotheses of the model empirically using data on pari-mutuel betting at horse tracks from 1950 through 1987. Gambling demand equations which explicitly account for the fact that gambling is an addictive behavior are derived from the Becker-Murphy theoretical model of rational addictive behavior. The effectiveness of changing the takeout rate, the price variable in gambling, is examined within the addictive framework.;A brief summary of the increased availability of gambling is followed by a review of non-economic and economic literature. The various factors which distinguish the consumption of addictive goods from other consumer goods are then discussed, particularly as they relate to gambling. After a discussion of the theoretical model, gambling demand equations are derived under the competing hypotheses of non-addictive and addictive behavior and myopic and rational behavior.;Using instrumental variables techniques, various gambling demand equations are estimated, with the results generally supporting the hypothesis of the model of rational addictive behavior. In particular, significant intertemporal linkages are found in gambling consumption, confirming the assumption that gambling is addictive. Future events are found to have a significant impact on current consumption, implying that individuals are not behaving myopically. The long run price elasticities of demand implied by the estimates obtained for the addictive demand equations for handle per attendant range from {dollar}-{dollar}0.50 to {dollar}-{dollar}2.49, significantly larger than those obtained from demand equations estimated under the hypothesis of non-addictive behavior. This reaffirms the fact that the takeout rate is an effective policy instrument for state governments as they set the price of gambling.
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Type
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dissertation
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Source
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PQT Legacy CUNY.xlsx
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degree
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Ph.D.
