A Modified Exponential Behavioral Economic Demand Model to Better Describe Consumption Data

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Abstract

Behavioral economic demand analyses that quantify the relationship between the consumption of a commodity and its price have proven useful in studying the reinforcing efficacy of many commodities, including drugs of abuse. An exponential equation proposed by Hursh and Silberberg (2008) has proven useful in quantifying the dissociable components of demand intensity and demand elasticity, but is limited as an analysis technique by the inability to correctly analyze consumption values of zero. We examined an exponentiated version of this equation that retains all the beneficial features of the original Hursh and Silberberg equation, but can accommodate consumption values of zero and improves its fit to the data. In Experiment 1, we compared the modified equation with the unmodified equation under different treatments of zero values in cigarette consumption data collected online from 272 participants. We found that the unmodified equation produces different results depending on how zeros are treated, while the exponentiated version incorporates zeros into the analysis, accounts for more variance, and is better able to estimate actual unconstrained consumption as reported by participants. In Experiment 2, we simulated 1,000 datasets with demand parameters known a priori and compared the equation fits. Results indicated that the exponentiated equation was better able to replicate the true values from which the test data were simulated. We conclude that an exponentiated version of the Hursh and Silberberg equation provides better fits to the data, is able to fit all consumption values including zero, and more accurately produces true parameter values.

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