Cecil Bohanon and John Horowitz: Unchecked consumption and the dilemma that follows

In a market economy, firms search for ways to make goods and services consumers want. Firms increase their profitability through the mass production and efficient distribution of their products. They constantly search for ways to entice consumers to buy the products via strategic pricing and attractive advertising. This is the standard recipe for profitability for everything from soup to nuts. In most cases, it enhances both shareholder and consumer well-being.

Unfortunately, some consumers have difficulty restricting their consumption of certain types of products or services. While many, sometimes most, consumers can moderate or prevent the potential harm from use, some consumers become physically addicted and behaviorally dysfunctional from their excessive use of the products or services.

Although people can manage to abuse almost anything, the list of problematic consumption goods and services includes legal goods such as social media, video games, caffeinated beverages and food. It also includes quasi-legal and highly regulated products such as tobacco, alcohol, gambling, pornography and prescription drugs, as well as explicitly illegal goods such as non-prescription opioids and prostitution.

In his book “The Age of Addiction,” University of North Florida history professor David Courtwright discusses the history and problems of addiction. He argues the same processes that promote legitimate goods and services also increase addiction to problematic ones. Addiction is more likely when a product is more available, low-cost, seductively advertised and socially acceptable.

Companies whose profits come from consumers who are addicted face difficult ethical questions. Do shareholders of liquor firms want to see profits enhanced by hawking cheap hooch to chronically homeless alcoholics?

In dealing with the excessive consumption of addictive products, Courtwright argues against both absolute prohibition and total deregulation. He advocates a middle ground. Even though most people consume most products in moderation, there may be good arguments for prohibiting the most dangerous products to at least some segments of the population.

To reduce excessive consumption, Courtwright supports prevention rather than treatment. Prevention policies include education, taxes and regulations. Moderate increases in taxes and regulations reduce consumption but also attract lobbyists. Significant price increases can lead to criminal activity such as bootlegging, smuggling and product adulteration, which can generate even more harm. Restricting or prohibiting advertising can reduce an addictive product’s use.

Courtwright adds that vice regulation tends to cycle between excessive repression and excessive toleration, as the 50-year-plus war on drugs seems to show. Politicians, regulators and citizens also have difficulty being moderate, even when promoting moderation.•

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Bohanon and Horowitz are professors of economics at Ball State University. Send comments to ibjedit@ibj.com.