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The Behavioral Economics of Addiction

By: Sai Srihaas Potu

Behavioral economics and neuroeconomics bring together perspectives and methods from psychology, economics, and cognitive neuroscience to understand decision making and choice behavior. Extending an operant behavioral theoretical framework, these perspectives have increasingly been applied to understanding alcohol use disorders (AUDs). Most broadly, behavioral economics refers to the hybridization of concepts and methods from psychology and economics to understand the choices people make, and neuroeconomics refers to the further integration of behavioral economics and cognitive neuroscience to understand the neural foundations of those choices.

Delay discounting has been linked to AUDs in both cross-sectional and longitudinal studies and has been investigated cross-sectionally using neuroimaging. Delay discounting is a measure of intertemporal choice that characterizes preferences for smaller immediate rewards versus larger delayed rewards. It is akin to the notion of capacity to delay gratification and is considered a behavioral economic index of impulsivity.

People differ substantially in how they discount the value of the future reward. For example, people with chronic deficits in impulse control tend to respond impulsively to tempting rewards that are immediately available. The impulsive behavior might facilitate alcohol use by reducing the weight given to its negative long-term consequences. Evidence shows that relative in consideration of future consequences is a key aspect of addiction and obesity. This inability to appropriately weigh delayed rewards can be quite harmful to an addicted person who may be willing to sacrifice future gains or incur major losses in exchange for instant gratification.

Cravings are a difficult aspect of alcohol addiction to measure. They are subjective, tricky to define, and mystifying in their source and how they often dominate decisions of the will. Researchers know that craving is an important component of alcohol addiction, but the lack of tools to measure it has kept it from being studied extensively.

A new study takes a look at cravings and the behavioral economics of alcohol addiction. James MacKillop, a psychologist at the University of Georgia, led the study that used a behavioral economic analysis to improve our understanding of cravings.

The researchers recruited 92 university students from the Northeast. Each student identified themselves as being heavy drinkers, indicating that they regularly consumed at least 21 drinks per week for males and 14 per week for females.

The participants were not provided with drinks but underwent a laboratory assessment after being poured a glass of spring water and after being poured a glass of their favorite beer. The participants reported their subjective craving for alcohol and estimated how much they would drink given an increasing price scale.

When the participants had their favorite beer in front of them, they experienced a significant increase in craving for alcohol and also increased the relative value of alcohol in behavioral economic terms. The participants indicated that they would drink more alcohol when it was listed at lower prices. They would also spend more money total on alcohol and they would continue to drink at higher prices.

Behavioral economics shows how subjective desires can be translated into more objective measurements, such as the number of drinks consumed, and the amount of money spent and could provide valuable insight into how cravings influence drinking. The researchers believe that this information may be helpful in understanding the common relapses in those who are trying to discontinue alcohol use. The information is also useful for those who try to reduce public alcohol consumption with tax policy.

With the widespread nature of not only alcohol and drug consumption but other more moderate but still unhealthy behaviors such as smoking and overeating, understanding how craving affects behavior is important for those who plan education and prevention measures.

Learning how craving and behavioral economics affect addiction will be critical for helping individuals struggling with substance abuse. Many who want to quit using substances are frustrated with the difficulty of overcoming powerful cravings.

The new way of thinking is that alcohol addiction is a disease similar to hypertension, asthma, or diabetes in the sense that it is a factor of genetics, behaviors, and environment. Studies of identical twins indicate that all three incurable diseases are partly genetic. Whether the person learns to manage their condition and live a healthy life depends on if they follow their doctors’ orders and change their lifestyles. In the management of diabetes, for example, a patient has to learn to monitor his blood sugar, take insulin, eat in a healthy way, exercise, and maintain a healthy weight for the rest of his life or else he could die from insulin shock, and/or risk amputations of his limbs and blindness. Alcohol addicts have to learn to abstain from using alcohol or else they will become addicted again.

Scientists have only learned in the last decade or so that alcohol addiction causes irreversible changes in the function and structure of the brain, causing a person to experience pleasure in an abnormal way. Once these changes take place, the person will become depressed without alcohol and will be unable to feel normal pleasure. All this research into brain chemicals, neurotransmission, and alcohol addiction is very recent since scientists are only beginning to use magnetic resonance imaging (MRIs) to observe how addiction actually works in the brain.

Considered collectively, behavioral economics and neuroeconomics provide a powerful framework for studying the nature of AUDs. Importing theories and tools from a variety of disciplines, these approaches attempt to conceptualize the problem from a unique point of view. Further research needs to be conducted to better understand the mechanisms that control feelings of addiction in order to provide effective cures for AUDs.


1. Amlung M, MacKillop J. Understanding the effects of stress and alcohol cues on motivation for alcohol via behavioral economics. Alcohol: Clinical and Experimental Research. 2014.

2. Amlung M, Sweet LH, Acker J. Dissociable brain signatures of choice conflict and immediate reward preferences in alcohol use disorders. Addiction Biology. 2012.

3. Bickel WK, DeGrandpre RJ, Higgins ST. Behavioral economics: A novel experimental approach to the study of drug dependence. Drug and Alcohol Dependence. 1993.

4. James MacKillop. The Behavioral Economics and Neuroeconomics of Alcohol Use Disorders. Addiction. 2016.

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