WHY DO PEOPLE DRINK - TESTS OF THE RATIONAL ADDICTION MODEL

The rational addiction (RA) model applied to alcohol consumption is te sted using 1983 US Health Interview Survey data. The RA model yields r efutable hypotheses concerning effects of current, past, and future pr ices, past and future consumption, time preference and marginal utilit y of wealth on addictive good consumption. The estimations provide rel atively strong support for the RA model. Past and present consumption had strong positive relationships with current consumption. Coefficien ts on past, present, and future money prices and fines for first offen ce drunk driving (as a form of price for alcohol consumption) were sig nificant and of the predicted sign.