Opium, Video Games, Optimality

Yesterday, I was eating lunch with a friend when he brought up this question: "Are video games destroying our economy?"

His argument was such. Premise 1: video games tend to be addictive. Premise 2: when people purchase a video game, they tend to remove themselves from society, production, and consumption.  Premise 3: that such a removal from society has negative effects on the economy. Premise 4: that the addictive-ness (is that a real word?) of video games means people will consume more and more of them at an ever increasing rate. Conclusion: Video games are destroying our economy.

I thought for a second, and said of course not.  People tend to make decisions to maximize their utility.  If they get more satisfaction from playing video games then, say, playing soccer or shopping, than they are better off by playing video games.  His concern has to deal with the externalities that are produced by people participating in society. However, each of the externalities produced (extra guy playing soccer, extra girl shopping) can be reduced to yet another market good for a different individual (the person who wants to put together a soccer team, the store trying to sell goods).  As long as people are left to their own decisions, the optimal economic situation will occur.  That's pretty much Austrian Economics 101.

Then I paused and thought a little bit more.  That relied on the assumption that people do rationally make decisions that maximize their utility.  And this is where Premises 1 and 4 raise their ugly heads.  Addiction is probably the most obvious case of human rationality failing completely.  You cannot argue successfully that a heroin addict is maximizing his utility when he is doing anything he can to satisfy his fix.  It short circuits the decision making process.  So, a video game player may be choosing to play a video game because it's the most profitable activity he could be doing at that moment OR he could be playing to satisfy a fix, in which case he is overall experiencing a net loss of utility (when opportunity costs are taken into account).

Thus, the question stops being a theoretical question and starts becoming an empirical question.  Are video game players happier than non video game players, with all other variables accounted for and controlled for?  To that, I have no answer.