Rational Habit Formation: Experimental Evidence from Handwashing in India

We test the predictions of the rational addiction model, reconceptualized as rational habit formation, in the context of handwashing in rural India. To track handwashing, we design soap dispensers with timed sensors. We test for rational habit formation by informing some households about a future change in the returns to daily handwashing. Monitoring and incentives raise handwashing contemporaneously, and effects persist well after they end. In addition, people are rational about this habit formation: when they anticipate future monitoring, they increase their current handwashing. Average child weight and height increase for all study arms given soap dispensers. (JEL D12, D83, D91, I12, I18, J13, O12)

Looking at the taxation effect on cross-state smuggling using rational addiction models

Purpose The purpose of this paper is to show how the taxation effect on cross-state smuggling can be a valid instrumental variable for lagged and future consumption together with the local price series. Design/methodology/approach On the same grounds, the authors raise the question using the rational-addiction model by noticing that the neighboring price differentials really capture the possible smuggling or bootlegging effects. Findings Moreover, the authors look into the extended model to test the key condition that the expected future financial consequences will affect the current consumptions. Originality/value This supports the rational-addiction model, which can be used to plan the taxation for the forward-looking consumptions.

Are Adolescents Addicted to Smartphones?

This empirical study shows how people use their smartphones by employing the rational addiction model of Becker and Murphy. The analysis uses micro-level panel data on the monthly usage of smartphone applications (so-called “apps”) derived from 10,337 users in South Korea, from 2012 to 2016. The authors find that smartphone users are “addicted” to mobile phone apps, in the sense that their prior usage has significantly influenced their current use. Nonetheless, people in the sample seem to use their smartphones in a forward-looking manner, adjusting consumption over time to maximize their utility. On the other hand, the study's result rejects the conventional belief that younger individuals behave more myopically than older ones. Furthermore, only the mother's smartphone use was found to generate a positive externality for her children.

Are Adolescents Addicted to Smartphones?

This empirical study shows how people use their smartphones by employing the rational addiction model of Becker and Murphy. The analysis uses micro-level panel data on the monthly usage of smartphone applications (so-called “apps”) derived from 10,337 users in South Korea, from 2012 to 2016. The authors find that smartphone users are “addicted” to mobile phone apps, in the sense that their prior usage has significantly influenced their current use. Nonetheless, people in the sample seem to use their smartphones in a forward-looking manner, adjusting consumption over time to maximize their utility. On the other hand, the study's result rejects the conventional belief that younger individuals behave more myopically than older ones. Furthermore, only the mother's smartphone use was found to generate a positive externality for her children.