Harm Reduction and Sin Taxes

by Mark Thornton (Mises Institute)

Addiction is a major challenge to the Chicago School’s view of rationality. Building on his work with George Stigler, Becker’s rational theory of addiction attempts to model compulsive consumption behavior within the confines of rational economic man. Drugs are not rational in the sense that drug abuse is the correct thing to do; they are rational in that their behavior can be understood and explained. Here price determines consumption, present consumption determines future consumption, and high time preference leads some individuals to heavily discount the future and the resulting harm that comes with long-term drug abuse.

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