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On the Topics of: Gambling, Drugs and Why Bo Is Wrong Again

Studying at the Artisan in May, Bo and I got into a lobsided debate where he advanced the specious position that drug addicts are utility maximizers and that heavy-handed pateranalism seeking to curb their fix is bad policy.

After all, Bo wobbily argued, the utility payoff of doing a line of coke, if addicted, is absolutely enormous. My reality-grounded response was that rational decision making is far less likely to occur when the body is under durress. This is why we allow a relatively pain free but dying person to refuse treatment, but not this morning's burn victim who is far more likely to act impulsively under pain and later regret his decision. I framed this in the economic context of being unable to appropriately discount the fufure by having current preferences somewhat exogenously coerced into an artificial intertemporal utility function that places a bad premium on instant gratification.

The reason I'm thinking about this now is two recent blog posts from renowned macroeconomists Greg Mankiw and Brad DeLong, here and here respectively. The whole discussion is short and more than worth reading, but I want to focus on DeLong's point here:
I'm tempted to jump in and head-butt the libertarian: If you were to ask a compulsive gambler if he really wanted to waste his life, he would probably say no: that the life he wound up with is not the life he really wanted. It is really hard for almost all of us to make good decisions, and 90% of doing well is finding institutions and situations in which the pressures are such as to make good decisions more likely.
The reason for paternalistic institutions that reduce compulsive gambling is identical to the paternalistic prescription for drug abusers. But "oh," the Bo might lament, "how can government possibly understand the intertemporal dynamics of one's utility curve more than the individual himself?" And here there is some semblance of an argument, because we have no empirical evidence (at least that I know of) that suggests if drug users could quit, they would. In economics we generally adhere to the maxim that talk is cheap, and that real preferences are revealed by consumer behavior. (This fosters a sort of intellecutal humility that places a premium on evidence.)

The intuition I shared with Bo was this: I suspect a drug abuser who is (from most social perspectives) ruining his life probably has moments where he wishes he could quit, and that if he could he would. Bo responded that this was conjecture, and if public policy was erected from such speculations we would probably see a lot of unhealthy market distortions.

Sooooo... fusing my intuition and my empirically rooted intellectual humility, I propose what could either be a thought or real life public policy experiment that could gather the real life data to help answer the question. I guess for us, the thought experiment is more relevant. It goes like this:

Take a sample of people that voluntarily admit themselves into rehab for hard drug use. Upon the completion of rehab, either through the liquidation of some assetts or a government subsidy, put them in the position of being in control of a substantial amount of money. Now that their bodies are no longer under durress, track spending patterns and see if there is a difference between pre and post rehab revelaed preferences. Alternatively, (enforceability issues aside) see if they would, upon completion of rehab, sign some sort of contract that inflicted heavy penalties for subsequent drug use.

As an experiment, it would to some extent answer the question: what extent is my conjectured scenario really the case - do hard drug users really want to better themselves but act in short-sighted, bodily-driven fits of irrational behavior.

My internet cafe time is up so I have to cut this short. But this gets at most of what I wanted to say.

im not sure the body under duress qualifer would hold. As I've personally seen, the rate of relapse is high, though I will admit those seeking help via rehab programs tend to relapse less often or harshly than the cold turkey crowd.

IMHO, as this is a pretty personal topic for me, I would just want to caution against a public policy proposal that would leave vulnerable people in a vulnerable position.

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