Rational Addiction and Cigarette in the Context of Health Economics—A Literature Review

Abstract

As a typical addictive consumption, cigarettes play a special role in socio-economic activities. The dual addictive characteristics of cigarette consumption make it both an income effect and a health loss effect, which has an important impact on the operation of the social economy: on the one hand, the sociable consumption of the group can maintain or strengthen the social network may bring an increase in income, that is, the income effect; on the other hand, excessive smoking makes the body much more likely to suffer from various chronic diseases, increasing the social health expenditure, and there is a health loss effect. This literature review illustrates the relationship between cigarette consumption and rational addiction behavior. I chose the base paper written by Gary S. Becker, Michael Grossman, and Kevin M. Murphy and titled "An Empirical Analysis of Cigarette consumption." The article concentrates on the smoking addiction problem and uses statistical models to collect data in the USA. Since the smoking addiction problems gets more and more serious, the paper plays an essential role in the policy planning by understanding the cigarette demand.