The economics of addiction

The primary course objective is for you to understand analytical and empirical issues in the domain of the economics of addiction.

We will examine substance abuse of illegal drugs mostly but we will also cover topics related to addiction to cigarettes, alcohol and gambling.

 Demand, supply, and costs associated with substance abuse. We will study and discuss economic evaluation of substance abuse treatments and policy alternatives.

The main tasks are for you :

1) to read the assigned chapters and research articles,

2) to discuss the points of each reading during class,

3) to prepare for examinations based on the texts and class discussion,

4) to complete the in‐class presentation and the coursework.

Likely topics: 

• introduction to drug use and abuse. Relevance from an economic point of view. Main types of illegal drugs. Chronological perspective of substance abuse.

• models of substance use and abuse: modelling addictive behaviour. Addiction and temporal preferences.

• models of substance use and abuse: demand estimation. Demand elasticities.

• supply of addictive substances: models of firm behaviour in markets with addiction. The average price of an illicit drug.

• supply of addictive substances: drug and crime. Gangs' financial structure. Effects of illegal drug selling on urban profiles.

• the costs of substance abuse: the effects of substance abuse on productivity and other labour market outcomes.

 • economic evaluation of substance abuse treatments

• policy alternatives: prohibition, regulation and taxation. Treatment. Prevention through education. • first part: addiction to gambling i.

• second part: in class presentations on selected topics.