Intangible Capital
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Intangible Capital

Its Contribution to Economic Growth, Well-being and Rationality

John F. Tomer

Despite increasing research efforts, there is still much confusion regarding the nature and contribution of the most intangible forms of capital. This book develops a comprehensive and unifying conception of intangible capital in order to understand its role with respect to economic growth, well-being, and rationality. As the book illustrates, utilizing the intangible capital concept enables many new and important economic insights. Intangible capital is defined to include standard human capital, noncognitive human capital (including personal capital), social capital, and other intangible manifestations of human capacity. Understanding intangible capital is a key to realizing the full human potential of our economic systems.
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Chapter 9: Addictions Are Not Rational: A Socio-economic Model of Addictive Behavior

John F. Tomer


INTRODUCTION Intuitively, most of us think of addictive behavior as unwise, excessive, overindulgent, compulsive, something to be regretted, ultimately destructive, and, of course, irrational. Mainstream economists, following Gary Becker’s lead, know better. Addictive behavior, they say, is like all other economic behavior; it is economically rational. There are two main purposes of this chapter. One is to explain why addictive behavior is not rational. The other is to develop a socio-economic model of addictive behavior that is an alternative to economists’ rational addiction theory. The explanation and the model draw on the insights of a variety of behavioral disciplines, especially psychologists, and combine these with economic concepts. It is hoped that these interdisciplinary theoretical perspectives will help us see addiction in a true light and help us connect to our natural intuition and wisdom concerning these matters. The plan of this chapter is as follows. The first section reviews the concept of addiction in the theory of rational addiction. The second section explores the essential nature of addiction including why people become addicted and the brain physiology of addiction. The third section explains why addictive behavior is not a form of rational economic behavior. It also argues that economic man needs to be replaced by ‘human man.’ Our socio-economic model of addictive behavior is developed in the fourth section. Some of the implications of the model are explained in the fifth section, and the final section provides conclusions. THE CONCEPT OF ADDICTION IN THE THEORY OF RATIONAL ADDICTION The theory...

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