Addictive consumption under conditions of risk

Addictive consumption involves health and other risks. This paper analyzes how such risks influence steady state consumption and equilibrium addiction . Mortality risks deter addictive consumption provided they are strongly ad diction-dependent If however risks are addiction-independent they may incre ase addictive consumption. Risks, which lead not to death but to large ongo ing disutility, also deter addictive consumption provided they are strongly addiction-dependent. Non-steady state extensions of these results hold pro vided large enough disutility is associated with addiction-dependent risk I ncreasing addiction-dependent risk and reducing addiction-independent risk promotes the social objective of reducing addictive consumption.