Wednesday, November 24, 2004

addiction & 2 problems of economics

This is my idea based off of Bernheim and Rangel's model of addict decision-making. It's a really neat model; it manages to relax rationality to allow someone to do something they don't want to do because they're addicted to it. [Rationality assumes a nice well-ordered set of preferences; this model hypothesizes as distinction between emotional "liking" and cognitive, forward "wanting" that can conflict.] The model is mathematically tractable, it can be used for public welfare analysis, and to top it off -- it's got neuroscientific grounding!

It appears to me there are two big criticisms of the economics discipline’s assumptions. One of course is rationality. The second has to do with the perfect structure of the market and environment that shapes both preferences and the ability to exercise them. One critique is about social structure: consumers are not atomistic individual units, but rather exchange information and ideas along networks of patterned social relations. (Social networks). For example, people do not find jobs by going to a marketplace with perfect information where firms offer to buy their labor at some equilibrium market price; rather, people almost always learn about job opportunities through friends and acquaintances, which present to a job-seeker only a tiny fraction of the labor market (Granovetter 1995, “Getting a Job 2nd Ed.”). The social structuralist perspective applies to addiction behavior too. Social pressures are often acknowledged to play a key role in starting and stopping drug use. Staying around friends who use drugs makes you more likely to continue use; a group of friends whose social relations all point towards each other will have a hard time breaking out than a group of people who maintain social ties to non-users.

The model of addiction behavior presented here is cognitively richer than a simple utility-maximizing-rational model, which makes adding new factors such as social structure/relations quite easy. Then notion of lifestyles that affect cues can be reformulated as social relations that affect cues. Spending time with a fellow addict increases your chance of going into “hot” mode and using the drug.

Social ties can also represent distribution channels for illegal drugs, which are very important in situations where drugs are criminalized and must necessarily be bought on a very imperfect, social-network-oriented market. How available drugs are is extremely important, and often availability comes through friends/acquaintances who are often also users. This is somewhat a supply-side consideration, though it’s integrated with the same social structure that’s important for cueing.

One approach to model social structure and addiction is to run this model to power an agent-based simulation. Hundreds or thousands of agents proceed according to the model, with the additional trait of having social ties with other agents. A social tie indicates that one agent can cue (tempt, or give/sell drugs) the other into “hot” mode, or pacify an addicted friend into “cold” mode. Social ties also affect “cold” mode decision-making: an agent with predominantly user friends should get less utility out of non-use activities than an agent with many non-user friends.

The effects of different social structures can be studied. In a world of close-knit groups with few ties between them, do we certain groups becoming populated with all addicts, and some groups staying clean? If we add the twist that agents shift their social ties to other agents like themselves, do we see a segregation of user vs. non-user social groups? More generally: does the existence of social structure create complex, emergent effects that are surprising or difficult to predict based on the initial individual agent model? Because of the reasons listed above, I’m inclined to suspect so, though it would be interesting to see what actually happens.

This would allow us to evaluate government policies that try to alter social structure. Many young students in U.S. schools undergo anti-drug education programs warning about the dangers of “peer pressure.” If an education program succeeds in weakening drug use transmission ties, how much can that retard the spread of drug use in the system, and under what circumstances? If, by causing agents to shift ties away from drug users, does that cause users to tie only to each other, quarantining them off for the benefit of non-users but exacerbating the problem for themselves? Or to evaluate the policy of criminalization: jailing drug users places them in an environment where they are connected to other drug users; if social ties are important to addiction, this should exacerbate their conditions.

Furthermore, such a study need not remain purely theoretical. I know of at least one study that did complete surveys of selected schools, and asked the students both questions about themselves [health status, say STD’s] and who their friends were [relational data]. They took data on a wide variety of health-related issues; it’s likely they took data on drug use too. Since they mapped out the entire social network of schools, you can go into one school and find networks of drug users and non-users. [I can’t find the cite for this study, but sociologists at Stanford are working with the data.] It may also be possible to design field work expressly for the purpose of finding data to support a good model.



Reference:
B. Douglas Bernheim and Antonio Rangel, “Addiction and Cue-Triggered Decision Processes”, forthcoming in the American Economic Review (mathematical appendix). Linked off of this webpage at the Stanford Neuroeconomics Lab.

Granovetter, Mark. Getting a Job 2nd Ed. year ???

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