TITLE:
A Dynamic Model of Gambling Addiction with Social Costs: Theory and Policy Solutions
AUTHORS:
Nazaria Solferino, Leonardo Becchetti, Maria Elisabetta Tessitore
KEYWORDS:
Addiction, Gambling, Social Costs
JOURNAL NAME:
Modern Economy,
Vol.9 No.12,
December
13,
2018
ABSTRACT: We investigate the effects of gambling
addiction in a dynamic model in which wellbeing crucially depends on the
accumulation of relational goods which is weakened by the consumption of
gambling. We outline conditions under which gambling may become addictive
leading to a suboptimal equilibrium from a social point of view. We examine the
relative effectiveness of different policy solutions (tax on gambling, gambling
restrictions) in bridging the distance between the equilibrium without
intervention and social optimum.