By Jonathan Gruber
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Extra resources for Risky Behavior Among Youths: An Economic Analysis
Developmental Psychology 29:549–63. Centers for Disease Control (CDC). 1998. Youth risk behavior survey 1995–CDROM. Atlanta. Dee, Thomas. 1999. The complementarity of teen smoking and drinking. Journal of Health Economics 18:769–93. Farrelly, Matthew, Jeremy Bray, Matthew Zarkin, and Brett Wendling. 1999. The joint demand for cigarettes and marijuana: Evidence from the National Household Surveys on Drug Abuse. Working paper. : Research Triangle Institute. Fischoﬀ, Baruch. 1992. Risk taking: A developmental perspective.
Over the years, economists have developed an aggressive agnosticism with regard to welfare analysis for individual choice, refusing to make any judgments that people are not 1. For a general overview of some of the topics studied by behavioral economics, see Thaler (1992), Camerer (1995), and Rabin (1998). Some Issues from Behavioral Economics 31 behaving in their own best interests. Caution is, of course, warranted because, more often than not, people probably have a better idea of what is in their own best interests than do economists, other social scientists, and policy makers.
Another subtlety goes hand in hand with the time inconsistency: Is the person aware of how her preferences will change? We discuss this issue below in the context of a preference for immediate gratiﬁcation. 13. , Ainslie (1975, 1991, 1992), Ainslie and Haslam (1992a, 1992b), Loewenstein and Prelec (1992), Thaler (1991), and Thaler and Loewenstein (1992). While the rubric hyperbolic discounting is often used to describe such preferences, the qualitative feature of the time inconsistency is more general (and more generally supported by empirical evidence) than the speciﬁc hyperbolic functional form.