In this paper I unify the economic theories of addiction and health deficit accumulation and develop a life cycle … theory in which individuals take into account the fact that the consumption of addictive goods reduces their health and … longevity. I distinguish two types of addiction: perfect and common. Individuals with perfect addiction perfectly control their …

incorporates mental and physical health. Correlated mental and physical health production functions are simultaneously estimated …, including the endogenous decisions to seek psychotherapy and smoke cigarettes as health accumulation factors. The model is … estimated by the Simulated Method of Moments with Indirect Inference using data from the British Household Panel Study. Results …