Do consumer s tastes differ final 1.7. - HEC

D O C ONSUMER’ S T ASTES D IFFER?
control mechanisms. Individuals have less control over their culture than over general social capital as
mentioned above. Culture strongly influences preferences and individual behaviour.
Sustainable culture, in turn, depends very much on individual choices and personal capital. Thus a
specific behaviour like cooperation can be sustained more easily without sanctions, if individuals are
habitual and they were cooperative in the past, even if they could gain from uncooperative behaviour.
When considering culture and tradition as part of social capital, there is a danger of creating
interdependence between social and personal capital, which might lead to a less precise result.
Other possible influence
In neoclassical economic analysis, economic outcomes are determined by preferences, technologies
and government policies. They include prices and wages, output growth rates, and the distribution of
incomes. In Becker’s approach, the endogeneity of preferences implies that the economy also affects
tastes regarding goods, leisure and other activities. Accordingly, economic outcomes are determined
by preferences, but preferences equally influence economic outcomes.
Addiction
To introduce addiction into his model, Becker (1998) differentiates between good addiction (good
music) and bad addiction (drugs, e.g. heroin).
On the one hand, positive addiction is examined. A person who has, for example, always listened to
good music will therefore usually develop an even more refined appreciation of good music.
Consequently, relative music appreciation rises with exposure. This is not due to a shift in favour of
music, but to a sinking shadow price as skill and experience in the appreciation of music is acquired
with exposure.
On the other hand, Becker (1998) considers the effects of negative addiction. The long-term effect of
heroin use on euphoric capital 16 might reduce its amount used at younger ages, or even discourage
any use because of the anticipated harmfully addictive affects.
An increase in consumption of a negative addictive good reduces the stock of consumption capital
available subsequently. The shadow price will rise accordingly at all ages. Nevertheless, this does not
indicate that the inputs of goods will fall with age and exposure; they are actually likely to rise with
exposure if the commodity’s demand curve is inelastic.
Thus, the use of drugs would grow with exposure at the same time that the amount of euphoria fell,
if the demand curve for euphoria and thus for drugs were sufficiently inelastic. Consequently,
addiction to drugs (a growth in use with exposure) is the result of an inelastic demand for heroin, and
not the cause of an inelastic demand.
Therefore, if there would be a case where it would not be evident whether addiction is harmful or
beneficial, the elasticity of demand could be applied to distinguish between them. As depicted above,
high elasticity indicates beneficial addiction, low elasticity the inverse. Additionally, we can derive
effects of taxing and punishments like imprisonment. These measures will mainly transfer resources
away from addicts if the goods are harmfully addictive, and for beneficial goods mainly reduce the
addict’s consumption.
One might question the above-mentioned aspects regarding the hypothesis of rational individuals
maximising their utility by anticipating future consequences of their behaviour. Yet, the concept of
addiction introduced here allows addicts to behave rationally as they maximise future utility with
stable preferences. It is important to see that people not only get addicted to alcohol, heroin and
16 “the commodity euphoria is produced with input of heroin, or alcohol or amphetamines”
B EKE T INNEBERG 14
19 MARCH 2003