Hedonists embracing virtue
In my last post, I argued vociferously against deontological virtue ethics in favour of hedonism. If individuals are rational, then any departure from our preferences will leave us worse off. Attempts to self-impose virtue, via new year's resolutions or even twelve-step groups, rarely work for this reason. There is a good reason why there is a thriving market in sentimental stoic self-help books, and hardly any binding contract arrangements. To illustrate this, I used the concept of rational addiction, yet many addicts do revert to abstinence. Many do successfully reduce or eliminate their consumption of vice. So how do we come to embrace virtue, and what can lead us back down the path to temptation? This post will return to the Becker and Murphy model to answer those questions. You guessed it, the answer lies in price changes and our incentives.
Why the war on drugs works
Suppose that the relative price of a was to change permanently. For instance, climate change and organised gangs growing more sophisticated generate a permanent increase in the supply of coca, corresponding to a permanent decrease in the price of cocaine. Or perhaps a new sentencing law doubles the penalties for committing the crime whilst intoxicated, corresponding to a permanent price increase. For a quadratic utility function, and a stable steady-state, the long-run price elasticity of demand is given by:
da*/dp = (δV/δW)[δ(k+δ)/B]/μc < 0
Given that μc<0, and for the existence of a steady-state B>0, the denominator is negative. A permanent increase in price will reduce consumption to a permanently lower steady-state. However, for greater degrees of adjacent complementarity, the smaller the magnitude of this change is, as B is smaller and the drug is more addictive.
For unstable steady states, the mathematics are the same, yet we consider whether our agent’s initial consumption is to the left or right of that steady state. If a price change shifts an individual from the left to the right of that steady-state, their consumption will perpetually increase. For vice-versa, they will tend towards abstinence.
As for changes to ω(.), the effect on a depends on the magnitude of the loss in ω(.). In general, drugs and alcohol are normal goods - their consumption rises as we get richer. However, if the tax of drug consumption on lifetime wealth (or in general, total sum of present discounted future utility) is sufficiently high, then a is an inferior good. If lifetime wealth falls, the opportunity cost of engaging in addiction is lower. This substitution effect can offset wealth effects.
The implication of this analysis is that, contrary to what many proponents of legalisation believe, prohibition of illicit drugs will be expected to reduce consumption. Supply is lower, and less competitive, than in the counterfactual, so prices are higher. Demand is in general more inelastic for more addictive substances, yet more addictive substances are more likely to generate unstable steady-states. With a higher price of heroin, more individuals will opt for total abstinence from chasing the dragon. Of course, higher prices may induce higher rates of property crime, or substitution towards cheaper yet more harmful substances (for instance synthetic opioids). So from this exercise alone, we cannot infer whether criminalisation of drug use is optimal or not. Yet those who posit that the war on drugs is ineffective in reducing consumption are in denial, and oblivious to how supply and demand works.
Of course, enforcement dynamics, the probability of being caught with an illicit substance, are another variable. They tend to loosen and tighten in accordance with the political mood, so can largely be modelled as temporary price fluctuations, as I describe next. Indeed, in the West, this probability is very low, which I think is what legalisation advocates are referring to, whilst neglecting to solve for the equilibrium.
Why do many addicts embrace sobriety after jail? Why do many relapse after a breakup?
Suppose that our agent faces unanticipated (ex-ante) relative price changes to a at t-1, and anticipates the price changes at t+1. Adjacent complementarity is both necessary and sufficient for current consumption to respond negatively to both price increases, and vice-versa. Our intuition runs via the dynamics of S(.). Past temporary price hikes reduce our past consumption, given a negative price elasticity of demand, and this generates less craving, thereby reducing our current consumption. Anticipated future price hikes mean that the increasing marginal returns generated by our cravings become more costly today, so we reduce our present consumption to reduce our overall cravings at t+1 to make our habit more affordable. Otherwise, budget constraints would fail to hold.
If our steady-states are unstable, these price fluctuations could shift us into addiction or abstinence as above. If we faced a stint in jail as an unintended consequence of our behaviours when under the influence, then we often become lifelong abstainers and participate in recovery circles. If we anticipate incarceration if our addiction continues, then this may be enough to convince some to opt for abstinence. Most will not touch heroin or meth precisely because we anticipate future negative shocks, however transitory, to our lifetime utilities. In this sense, this intertemporal forward-looking nature of addiction is what distinguishes it most clearly from myopic irrationality. If addicts fail to anticipate and internalise the future, then none of them would ever get sober.
Exogenous shocks to δ, driven by key events in our lives, may also obviously influence our consumption. People tend to relapse during times of high negative affect, such as bereavement or divorce. Conversely, there is a tendency to sober up upon finding a new romantic partner, and starting a family. Not only do these affect consumption in the direction that we expect, but they also change the degree of adjacent complementarity itself. Therefore, it is possible for a former moderate drinker to embark on a binge towards DTs: a shift from a stable to unstable steady-state. Those in an unstable steady-state state may also shift to stability, or to abstinence or addiction.
In this sense, drug addiction is often a form of self-medication, and a substitute to a fulfilling life. Yet this returns us to the questions that virtue ethics sought to answer in the first place: what defines a good life? How should we live to attain the most fulfilling life? What is the means via which we achieve mental stability and meaning? Indeed, the answers to these are the very raison d’être of virtue ethics.
Virtue is stable, yet vice is the answer to adversity
If addiction is a substitute to a fulfilling life of meaning, and indeed many addicts are unhappy with their lives, then why do they continue to engage in the activity? How can it be rational? I would argue that the counterfactual is an excruciating sense of depression or anxiety when sober that makes even drunken homelessness a superior alternative. People do not (as I have argued, knowingly) risk their homes, their jobs, even their freedoms, for nothing! Eventually a large number cease using, or moderate, anyhow; demonstrating the phenomenon that addiction is often a response to transitory life shocks, which change the value of δ. If virtue is indeed the path to a good life, people will adhere to such philosophy. If people deviate from those principles, there is a compelling case as to why. We consider their actions to be stereotypically representative of irrationality, yet if we held complete information on their lives, the rationality of their addictions soon become apparent. This is also contradictory to the notion that virtue is our path through adversity. For many, in fact vice is what helps them through life's challenges.
Usually, the rational addiction framework, in the notion that addiction is a choice, is used to stigmatise addicts or to eliminate any sympathy for them. It can also foster empathy for this neglected underclass. Yes, we should not sympathise with them, yet sympathy (feeling bad for their plight) is distinct from cognitive empathy (the ability to reason from their perspective). If we empathise with them, and so long as they are not acting antisocially as a cause of their addiction, then those of us that regard ourselves as moral agents must not judge.