Addiction and drug prices

Slate has an interesting piece on "the economics of addiction," studying how demand and price interact in a world of hard core dependence:

Rational addicts should behave in certain ways. They should, for instance, respond not just to current price increases but to expected future price hikes. If heroin is likely to get more expensive, rational addicts should consider trying to quit before that happens. Addicts may even be more sensitive to lasting price shifts than nonaddicts. And since addiction is self-reinforcing, when the rational addict wants to quit, cold turkey is the efficient way to do it.

Economists have found some evidence to support these ideas: Pamela Mobilia finds that betting at racetracks falls in anticipation of increases in bookies' takings; Nilss Olekalns and Peter Bardsley find that coffee addicts show similar foresight; Philip Cook and George Tauchen found that when some U.S. counties raised taxes on alcohol, liver cirrhosis fell more sharply than overall consumption, suggesting that it was the alcoholics who cut back most.

I'm no economist (in fact, I'm no just about anything that might be relevant to writing for this blog), but it all sounds very intriguing. Of course, from my own experience, if I want anything badly enough, I tend to screw my life up trying to find money for it - and I'm just talking about computer gear and CDs, so clearly I don't have the right context to appreciate the fine detail in this article. But it's still worth a look - heaven knows a fresh perspective on understanding what motivates long term hard core addiction would certainly be welcome.