Publication Date

January 2002

Publication Details

Levy, A and Faria, JR, A Theory of Chronic Loss, Suffering and Alcoholism, Working Paper 02-16, Department of Economics, University of Wollongong, 2002.


This paper focuses on the consumption of alcohol to numb the suffering associated with failure. While drinking reduces the individual’s current level of suffering, it leads to future failures and potentially greater suffering. The basic model shows that the stationary status of an alcoholic is improved by the difference between his rate of time preference and the rate of return on his status and that this improvement is amplified by the ratio of the instantaneous suffering-relief effect to the status-eroding effect of alcohol. The extended model shows that society’s reaction to alcoholism may lead to permanent cyclical alcohol consumption.