Ph.D. Candidate Gordon Brett has recently co-authored and published an article in Marketing Science, entitled, “A dynamic model of rational addiction: Evaluating cigarette taxes”. The article details the creation of a dynamic model of addiction and stockpiling in order to investigate the effects of various policy interventions on cigarette purchases.
Gordon Brett is a Doctoral Candidate at the University of Toronto’s Sociology Department. His research interests lie at the intersection of sociological theory, culture, cognition, and the body/embodiment.
We have posted the abstract below. The full article can be viewed here.
Gordon, B. R., & Sun, B. (2015). A dynamic model of rational addiction: Evaluating cigarette taxes. Marketing Science, 34(3), 452-470. https://doi.org/10.1287/mksc.2014.0885
Addiction creates an intertemporal link between a consumer’s past and present decisions, altering their responsiveness to price changes relative to nonaddictive products. We construct a dynamic model of rational addiction and endogenous consumption to investigate how consumers respond to policy interventions that aim to reduce purchases of cigarettes. We find that, on average, the category elasticity is about 35% higher when the model correctly accounts for addiction. However, some policies spur substitution from more expensive single packs to less expensive cartons of cigarettes, resulting in higher overall consumption for some consumers.