A competitive market for a particular alcohol product or the aggregate product category alcohol
is shown in Figure 1. The demand curve D represents the marginal private benefits (MPB) of
the alcohol product to consumers. It represents consumer valuation of the social, recreational,
taste and other sensations gained, and it deducts any private costs of alcohol consumption.
Well-informed and far-sighted rational individuals take into consideration not just current period
benefits and costs to them, but also any longer-term costs associated with alcohol consumption,
including risks to future health and employability. This forward-looking, decision-making framework
is an example of Becker and Murphy’s (1988) model of rational addiction.