Pigouvian taxes for computer games
Tyler Cowen at Marginal Revolution asks the following question:
Let's say, for purely hypothetical purposes, that the perpetually restless, short attention span, technologically inept me wanted to make an initial foray into computer games. Where should I start? How should I start? What mistakes should I avoid?My personal advice is “run away!” There seems to be quite a bit of evidence that computer games can be addictive. Further, I think that certain types of games can be especially difficult for people of above average intelligence (as Dr. Cowen certainly is). I still remember discovering SimCity at the age of ten or eleven. Fortunately, my parents had the good sense to recognize that spending hours a day playing SimCity might not be the best thing for a ten year old.
There is a long but interesting post at Soul Kerfuffle by a recovering World of Warcraft addict. There are over 700 comments on the post, many detailing how a game addiction cost them their friends, family or career. One particularly interesting comment compares the game makers to tobacco companies:
…[the makers of World of Warcraft] rake in about $140M/month in revenue. They're not gamers anymore. They're "business men" managing serious money. Just like tobacco companies, they design their products for addiction. What's happened in our lives isn't by accident. It's intended.Now I’m not claiming that software companies are evil – of course they should design products to keep people coming back for more. However, I wonder if from a welfare point of view we should consider using Pigouvian taxation to lower consumption. Granted, the externalities from World of Warcraft are small relative to smoking, but perhaps the Becker and Murphy rational addiction model does not perfectly apply.
If people do not understand the addictive nature of these games or they overestimate their own self control they may not be maximizing their utility when choosing to play. In this case we may also be concerned with the “internalities” of computer games. Is there evidence that people want to quit but cannot or that they wish they had never begun playing?
Footnote: for more on the “internalities” of smoking see Jonathan Gruber’s “Tobacco at the Crossroads: The Past and Future of Smoking Regulation” in the spring 2001 issue of JEP.