Gamblers should have the freedom to choose constraints

The community should enable gamblers to set, in advance, hard limits on the amount they bet.

Walk into a NSW pub or club at any given time, on any given day, and you will witness tragedy. You will find people with bodies hunched into pokie machines, empty faces gazing zombie-look into a whirl of colour.

Some of the gamblers are in control, only having fun. But some are miserable addicts; pouring their family’s livelihood down the drain.

It is hard to understand how our society considers it acceptable to actively facilitate and profit off such pathological self-destruction. It hurts not only the addicts themselves, but their families as well.

Few in the community would support dealers profiting off heroin addicts. Why is the principle different for gambling?

Putting aside innocent families, it might be argued that gamblers should be allowed to destroy themselves due to a principle of self-determination.

This viewpoint is increasingly hard to reconcile with empirical research from psychology and economics.

Traditionally neo-classical economists have assumed that an individual generally behaves as a unified subject who rationally maximises consistent and stable preferences. That implies a faith in our moment-to-moment choices. The famed micro-theorist Gary Becker even developed a model of “rational addiction”.

But decades of empirical work has shown that in many domains our choices in fact do not follow a consistency that is traditionally considered a minimum threshold for ‘rationality’.

Rather we display “hyperbolic discounting” – that is, placing a disproportionate emphasis on immediate pleasure over future welfare. For example, someone who chooses to wait 365 weeks for $120 rather than 364 weeks for $100, might make the reverse decision if it’s a choice between next week and this week. There is something seductive about receiving a reward right now, which distorts our usual preferences for patience. Thus our own choices about time and money are internally inconsistent.

A related area of research has shown how choices change depending on whether they are made in “hot” or “cold” psychological states. For example, in an addict’s calm reflective moments, they may have a genuine determination to quit. Their ‘cool’ long-term-focused self wants to rein sovereign over their ‘hot’, impulsive self.

This is not just cheap talk. They demonstrate willingness to pay, investing time and money into therapy and rehabilitation. And yet… in a moment of weakness the same person will go and get smack.

One way economists are conceptualising this internal inconsistency is to assume multiple ‘selves’, pulling individuals in different directions (for example here).

This leaves an obvious question. Which ‘self’ should public policy take as the authority for purposes of maximising self-determination? The ‘cool’ self with its eye on long-term wellbeing, or the ‘hot’ absorbed in its immediate impulses? We have to choose.

I would argue we should empower our calmer, more considered selves.

Applying this to gambling would enable gamblers to impose, in advance, a cap on the amount they bet each year.

To achieve this, the government could issue cards to everyone in the community who wants to gamble. Each card-holder would be given the option of setting an annual limit. If they choose to do so, they can lower the limit at any time, but not increase it. Gambling organisations would only be permitted to accept bets from those with a card (although card holders can elect not to have a limit). All card holders would see their yearly spending total at the start of each gambling session.

Ideally, this policy would be funded through cost-recovery arrangements levied on the gambling industry. Alternatively – if we wanted to be more libertarian – it could be recovered through fees on those who elect to use the cap facility. That way it wouldn’t financially affect anyone except the individuals who make a choice to use the service.

Given that this policy expands an individual’s choice set, even a dogmatic individualist would have a tough time mounting a coherent argument against it.

Privileging the long-term self over the short-term self has obvious moral and practical benefits. Free market liberalism, however, does the opposite.

The free market liberal model worked pretty well for a long time. But as our societies become wealthier, and as technology is allowing us to satisfy whims 24/7, our major social problems are increasingly caused by too much consumption as much as too little consumption.

Think of the major emerging health challenges – diabetes, obesity, drug and alcohol addiction – these are all related to impulsive consumption of temptation goods. One of the major demographics in the USA is experiencing an unprecedented decline in longevity due mostly to these temptations.

Only an expanded model of self-determination can address the growing gulf between spontaneous behaviour and what individuals really want for themselves. In this environment, maybe it will be the government – rather than the market – that will play the key role in expanding individuals’ capacity to self-actualise, to be who they truly want to be.


4 thoughts on “Gamblers should have the freedom to choose constraints

  1. Su-Min

    Great idea! I do want to point out, though, that the idea that people contain multitudes isn’t exactly new (not that you implied this) and I think it says something not very flattering about our profession as economists that it’s often treated as something groundbreaking or revolutionary.

    Liked by 1 person

  2. davidsligar Post author

    Thanks! Definitely – the idea has literally been around almost as long as written word has been. Can find it in the ancient philosophers, in the bible etc. I think the economic story is worth telling tho, just because so many libertarian discussions are framed in these terms. Even with the most favourable theoretical assumptions in the social sciences, it still can’t withstand the data.



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