Publication Date

June 2006

Publication Details

Levy, A and Faria, JR, Depression and Substance Abuse: A Rationalization of a Vicious Cycle, Working Paper 06-16, Department of Economics, University of Wollongong, 2006.


While a mind-altering-substance consumption alleviates current level of depression, it facilitates future depression. Our analysis incorporates this trade off and shows that the stationary state of a consistently overly ambitious sophisticated substance user is improved by impatience, and that this improvement is amplified by the ratio of the instantaneous depression-relief effect to the state-degradation effect of the substance. The analysis also shows that the existence of a supportive personal community leads to permanent cyclical substance consumption when the user is relatively patient.