Preference,Time Discounting, Intertemporal Choice And Addiction

From the perspective of history, along with the worldwide rise and spread of addictions, habituation gradually evolves into a social problem. Sociology, medical science and other disciplines all make researches on it, but they focus merely on its hazards and consequences. In the "Principles of Economics", Marshall proposes that economics is the science of wealth and man. Therefore, it is feasible and reasonable to analyze the addictive behaviors of man from the perspective of economics. The research of economics is concerned about not only the consequences of addictive behaviors, but also the decision-making process of the addicts. As Samuelson put it, once entering into this novel field, you will find a totally different world.The thesis proceeds in accordance with the sequence of "theoretical analysis" and "countermeasures study". In the part of "theoretical analysis"(Chapter3and Chapter4), the thesis proposes that rational decision-making model assumes that people are index discounters and their preferences are stable, which ignores the impacts of psychological factors on the addictive behaviors. Therefore, in the view of neoclassical economics, addictive behavior is a rational act, but on some issues, it cannot make a convincing explanation. Behavioral economics draws on psychology and experimental economics and it deems that people’s discounting is hyperbolic and their preference will be dynamically inconsistent. Namely, preference reversal will appear. On this basis, behavioral economists make a strong explanation on the nature of addictive behaviors. In other words, addictive behavior is a complex behavior, which is both selective and obsessive. This thesis tries to divide the addictive behaviors and integrates other addictive theories into the analysis framework of behavior economics. Researches on countermeasures (Chapter5and Chapter6) are conducted based on theoretical analysis. On one side, addictive behaviors are selective. Therefore, from an individual perspective, it is necessary to forge willpower and improve self-control ability. Besides, specific strategies are proposed. On other hand, because of intrinsic stress, addictive behaviors are somewhat compulsive. Therefore, to get rid of addiction, personal power is not enough, social aid is also needed. Social aid mainly has two means:firstly, external addiction and legal paternalism result in the necessity of legal intervention. Besides, corresponding legal obligations are determined in accordance with Hand Formula to provide legal regulation and aid; secondly, those deep compulsively addictive behaviors need to be treated medically.In the whole, any kind of strategy will change the addicts’ preferences to earlier but smaller rewards and form their preferences to bigger but deferred rewards. From a rational perspective, any strategy is made on the basis of maintaining and restoring individual rationality.