Authors : Claudio Deiana (Università di Cagliari, CRENoS and IZA), Davide Dragone (Università di Bologna), Ludovica Giua (Università di Cagliari and CRENoS)
Abstract
We propose a model of addictive consumption to study the demand for imperfect substitutes, including substances like alcohol and nicotine, as well as behavioral addictions such as gambling and digital addiction. We empirically examine a 2017 Italian policy aimed at reducing gambling by limiting slot machine availability. Our findings indicate an unintended 25% increase in net expenditure, particularly among low-wealth and low-educated individuals who also engage in other addictive behaviors. This result suggests that the policy increased congestion and temptation costs, especially for highly addicted individuals.