Riccardo Faini CEIS Seminars

Unintended Consequences: An Economic Theory of Painkiller Addiction and its Impact on Wellbeing and Longevity
November, 30th 2018 (12:00-13:30)
Room B - 1st floor

Holger Strulik (University of Göttingen)

Riccardo Faini CEIS Seminars

In this paper, I propose a life cycle model of painkiller addiction that combines the theory of health deficit accumulation with the theory of addiction. Chronic pain is conceptualized as a persistent negative shock to lifetime utility that can be treated by pain relief medication.
Some individuals treated with opioid pain relievers develop addiction, which increases their demand for opioids and reduces welfare and life expectancy through side effects and potential overdose. Nevertheless, individuals prefer opioid treatment if they fail to understand how it causes addiction. Once individuals are unintentionally addicted and access to prescription opioids is discontinued, consumption shifts to illicit opiods (like heroin). I calibrate the model for a benchmark American and investigate the comparative dynamics of alternative drug characteristics, pain intensities, and ages of onsets of pain and their implications for welfare and life expectancy. I also discuss treatment of the addicted by medication that controls cravings or depresses the effect of opioids and discuss the use of opioids in palliative care.