Folk addiction = time inconsistency?

By Matt Nolan 16/01/2014

As you may or may not know, I am a vegetarian.  As a result, occasionally I talk myself into needing more protein.  To do this I eat cashews, which I think are actually just mainly fat, but are very yummy.

Anyways, I went along to the supermarket and purchased a small number of cashews.  The checkout operator warned me “be careful, those are addictive”.  I responded by saying “hey that is why I buy them is such small quantities”.  We’ve talked about this idea in the past here and here.

Now what we really described there was a situation where the consumption of cashews is time inconsistent, and where I use a precommitment strategy of “buying less of them”.

This broad definition of addiction, which merely means that you are unable to commit to an optimal time path of consumption, is fine.  But the cost of it is limited by the cost of precommiting.

When viewing action externally, one way we might believe we’ve seen addiction is when we see choices that increase the net benefit of consuming the good in the future.  This is not really addiction as defined as a “failure” – but instead just describes a process that people with addictions may show, and provides an important area where “lack of information” is a concern.  However, if our observation of addiction depends on looking at items that behave this way it does imply we need to be very careful – and that we have to also be careful not to mix up choices that increase net benefit by increasing the benefit of consumption, as opposed to choices that do so by increasing the cost of not consuming.  In this way, we are unlikely to call examples of this type of process “addiction” in common parlance.

All these definitions might make us feel good – but in truth, as was the case in the supermarket, we are just applying “folk psychology“.  Non-expert usage of both “common sense” and technical terms to try to discuss psychological phenomenon we observe in our daily lives.  To clinical people, and people in psychology, addiction is significantly more specific, and involves specific conditions and physical traits (depending on the type of addiction) – of course I don’t know what these are, this is just what people who are experts in this field tell me, and their appeal to authority is compelling as it is not my field!

Note:  Calling economics a form of folk psychology is a common refrain from Rosenberg – an issue that recently caused an uproar.

So given this, would you agree that models of addiction that economists may mention based on either rational choice or time inconsistency are “folk psychology”, or is the essence of the term different as it is being used in a different context?  I am interested in arguments both ways :)

And one extra point.  When the term addiction is used in policy, and by academics, how does its meaning compare to the way the public interprets it?  If addiction means something different, then there is likely to be an issue of communication with the public – this is a common issue when discussing inequality, GDP, unemployment, and even poverty for macroeconomists so I wouldn’t be surprised to see subtitles lost in translation here.