The Neuroeconomics of Addiction
The peculiarities of addiction have been pored over using microscopes, telescopes and kaleidoscopes by many inquisitive human beings across various disciplines. Unanimous consensus (which I’m tempted to classify as a mythical concept) on the aetiology of addiction has hitherto evaded us all. The definition of addiction is murky at best with explanations contradicting one another. From this seemingly impenetrable fog emerges neuroeconomics, a union of ethology, neuroscience and economics. A relatively new branch of study, neuroeconomics has the potential to explore neural mechanisms that govern how the brain processes reward, punishment and decision making. It also promises to be a powerful method using which we can understand addictive behaviour.
Before we delve into what we know about the neuroeconomics of addiction, let us take a detour into neoclassical economics to understand what was wrong with models explaining addictive behaviour in the past. In particular, we shall consider the Rational Addiction Theory (RAT) by Murphy and Becker (and subsequently endorsed and improved upon by many others[TC1] ) as it is one of the standard models used to model addictive behaviour in economics.
What is the Rational Addiction Theory and why is it problematic?
● How does RAT define addiction?
Addiction is defined as a causal effect of past consumption on current consumption. In simpler terms, a person is potentially addicted to a substance if an increase in their current consumption increases their future consumption. That is, “addictiveness” is subjective.
● Key features of the rational choice model for addiction:
1. Addicts are considered to be rational and forward-looking. “Rational” refers to individuals who maximise utility over time.
2. Consumption of the addictive substance is said to be done under perfect information. A substance is potentially addictive if increases in past consumption raise current consumption. (Alternatively, if increases in current consumption raise future consumption)
3. Addicts respond more to permanent than temporary changes in the price of the addictive good.
4. A person decides to end his addiction if events lower either his demand for the addictive substance or his stock of consumption capital sufficiently. Heavily addicted people can quit addiction “cold-turkey” only, that is, using complete abstinence.
5. Binges are common in addiction. Binges are defined as a cycle of consumption of the addictive substance over time. They are said to be consistent with rationality using an extension of the model.
6. Individuals who discount the future are more likely to be addicted. Other determinants for potential addiction are level of income, stressful life-events and price-levels of the substance.
● Key criticisms of RAT:
1. The first and most prominent criticism of RAT is that the behaviour of real-life addicts and their addictions is not sufficiently explained by the model.
2. Secondly, one of the highlights of the model centers around the fact that the behaviour of addicts is not sufficiently deviant from the general population and hence does not pose a challenge for welfare analysis. This is untrue.
3. Jon Elster, the philosopher, has claimed that the theory is “conceptually incoherent”. (Although this claim has been refuted by several economists)
4. Ole Rogeberg has provided an elaborate criticism of the theory in his 2004 paper “Taking Absurd Theories Seriously: Economics and the Case of Rational Addiction Theories”. Here he talks mainly about how the theory uses elaborate mathematics to disguise its ineffectiveness and unsuitability. He also criticises the “storytelling approach” that is the use of ad hoc evidence and a smattering of anecdotes as universal “proof” of addictive behaviour.
5. Others like sociologist Ole-Jørgen Skog have criticised the rationality assumption of the theory.
The key takeaway from the Rational Addiction Theory is that, although it seems mathematically plausible and tries to “explain” addictive behaviour, it fails when we consider the behaviour and decision-making process of real-life addicts. The assumption of addicts making informed choices about the future after considering the pros and cons of all future outcomes is indeed, absurd. As, if this were really the case, there would be no addicts at all.
What does Neuroeconomics bring to the table?
The outline-
The base of the neuroeconomic approach revolves around the fact that the nervous systems of humans (and other animals) have evolved to promote behaviours that enhance evolutionary fitness. Our nervous systems contain a host of behavioural adaptations suited to overcome social and environmental challenges. Two concepts are key here — reward and punishment. Rewards are considered to be goals which, when achieved, contribute to evolutionary fitness. Similarly, avoiding punishment is a goal that ultimately serves the long-term goal of optimal survival. The hypothesis is that, in addicts, these systems of the brain malfunction resulting in destructive patterns that do not optimise biological fitness. Moreover, because of the social tendencies of human beings, addiction not only affects the physical and psychological well-being of the individual, it also has repercussions on the community as a whole (Especially in the case of widespread substance abuse).
How is neuroeconomics different in its approach?
What differentiates neuroeconomics from existing approaches is the neural representation of “value”. “Value” quantifies how neurally motivating a behaviour or outcome is and neuroeconomics investigates how brains interpret and store “value”. “Value” is essentially neuroeconomics’ equivalent of utility. In fact, the methodological tools used to understand “value” have been adapted from conventional economics.
What does addiction mean in neuroeconomic theory?
In neuroeconomic theory, dysfunctional behaviours associated with addiction occur when a particular substance has a very high “value” or when its competing alternatives have very low “value”. There are several hypotheses that consider the question of whether addicts are affected abnormally by rewards. Reward sensitivity i.e. studying the areas of the brain that react to rewards, has been explored by neurobiologists but there have been too many inconsistencies to sufficiently explain what goes on inside an addict’s brain with respect to rewards. The way forward is to narrow down the areas of research in reward sensitivity to more specific questions that will help us understand the underlying pathophysiology of addiction.
Delay discounting is another source of irrationality that has been linked to the cause of addiction. Delay discounting refers to the tendency of motivation related to events being inversely related to their delay. That is, if a person got “drunk” a month after they incurred all the costs related to drinking, the drink would not be as compelling. People who have higher tendencies to discount are at higher risks of being addicts.
The second area of relevant research in neuroeconomics with respect to addiction is through learning. The argument here is that nobody is born with a motivation to be an addict and the assignment of high “value” to a substance is “learnt”. The model used here is reinforcement learning. Experimental studies reveal that the dopamine activity in the reward pathway of the brain is active during the consumption of psychoactive substances which results in a prediction error and assigns a very high “value” to consumption of the substance. (Dopamine is a neurotransmitter) Although, this hypothesis is only applicable to psychoactive substances and does not account for addiction to money or sexual activities. Nor does it account for individual differences in the development of addiction or behaviours in addiction that do not stimulate dopaminergic functioning. Therefore, this argument can, at best, be one of the sources of an individual’s vulnerability to addiction.
The third and pertinent area of research in the neuroeconomics of addiction is the relation of self-control with addiction. Admittedly, much of this is unexplored, and there are a few key questions that ask to be studied and, if answered, can be breakthroughs in the study of addiction. The neuroeconomics of self-control revolves around how the “value” assigned to a substance changes when a person resolves to stay away from it. For example, if a drinker decides to quit drinking, how much of an impact does this decision make on his brain? If offered a glass of whisky, what is his motivation level to consume it? Does making a resolution that he will not drink make the glass of whisky offered more costly? How does this change in motivation stand when compared amongst different kinds of addicts (demographies, duration of addiction, age, etc.)? If someone decides to quit 5 times over the span of a decade and is successful in the 5th attempt, did their previous resolutions contribute to their current success? A conflict that arises is if making a resolution leads to an internal feedback loop. Simply put, the expectation of the drinker on their future behaviour affects the “value” assigned to the current glass of drink. Again, the “value” of the current glass of drink has an impact on future behaviour. This makes decision making chaotic for the addict. Another notion to be considered is that someone who assigns a high “value” to a substance say, a cigarette, can assign a low “value” to the overall tag of “being a smoker”. The conflict between the two has implications on addictive behaviour.
Incorporating the dynamics of self-control into the study of neuroeconomics will require models of a kind that have not yet been built. The future of neuroeconomics is to give us a clearer picture on reward pathways, neural mechanisms specific to drug use and abuse and in-depth characterisations of “value” in the context of reward, motivation and punishment. The field of neuroeconomics is relatively new but holds great promise in unveiling the way our brains perceive the world and govern our economic decisions.
I conclude in the hope that economists focused in the area of neuroeconomics will someday develop suitable frameworks that extensively as well as adequately capture the neural mechanics of an addicted mind. While addiction can be cunning, baffling and painful, perhaps a comprehensive glimpse within can help us understand addicts better. With understanding will come our motivation and efficiency to help and ease their pain — either through policy measures or advanced medical help. Grasping why and how addiction works will (hopefully) equip us with the tools to combat it and purge society of this very unnecessary evil.
(Parnika Ganguly is an actuarial student, majoring in Maths from the University of Delhi and can be reached at gangulyparnika@gmail.com)
