Testing for the rational addiction hypothesis in Spanish tobacco consumption

Abstract

This paper tests whether tobacco consumption generates addiction in Spanish people and, if so, then whether such addiction can be explained in the context of rational addiction theory. To that end, time-series data of per-capita consumption and prices of tobacco during the period 1964 to 1995 are employed. The results show the addictive and rational character of Spanish tobacco consumption, which implies that smokers fall into addiction after a maximization process of the utility that was obtained during their total lifetime, taking into account the future consequences of current decisions.