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Resolving the milk addiction paradox
Journal of Health Economics ( IF 3.4 ) Pub Date : 2021-03-19 , DOI: 10.1016/j.jhealeco.2021.102452
Davide Dragone 1 , Davide Raggi 1
Affiliation  

The milk addiction paradox refers to an empirical finding in which consumption of non-addictive commodities such as milk appears to be consistent with the theory of rational addiction. This paradoxical result seems more likely when consumption is persistent and with aggregate data. Using both simulated and real data, we show that the milk addiction paradox disappears when estimating the data using an AR(1) linear specification that describes the saddle-path solution of the rational addiction model, instead of the canonical AR(2) model. The AR(1) specification is able to correctly discriminate between rational addiction and simple persistence in the data, to test for the main features of rational addiction, and to produce unbiased estimates of the short and long-run elasticity of demand. These results hold both with individual and aggregated data, and they imply that the AR(1) model is a better empirical alternative for testing rational addiction than the canonical AR(2) model.



中文翻译:

解决牛奶成瘾悖论

牛奶成瘾悖论是指一项实证发现,其中牛奶等非成瘾性商品的消费似乎与理性成瘾理论一致。当消费持续且具有汇总数据时,这种矛盾的结果似乎更有可能。使用模拟和真实数据,我们表明当使用描述理性成瘾模型的鞍形路径解的 AR(1) 线性规范而不是规范的 AR(2) 模型估计数据时,牛奶成瘾悖论消失了。AR(1) 规范能够正确区分数据中的理性成瘾和简单持久性,测试理性成瘾的主要特征,并产生对短期和长期需求弹性的无偏估计。这些结果同时适用于个人数据和汇总数据,

更新日期:2021-04-09
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