Addiction Economy
Illustration and Charts by Shira Seri Levi
Hair of the Dawg
It’s the final day of Dry January. I tried it, didn’t last. I’m now drinking (again) like a Pan Am pilot in the seventies. Anyway, the 22% of U.S. adults who abstained from alcohol this month will get a personality upgrade just in time for the Super Bowl. Ostensibly, the Super Bowl is a contest between the two best football teams, but really it’s a platform for the real economy: the addiction economy. As Matthew McConaughey says in the latest ad from Uber Eats, “the whole game is basically an elaborate scheme to make you buy more food.”
Super Bowl ads are a proxy for the addiction economy, as advertisers for the food industrial complex, beer and alcohol brands, online gambling, crypto, and social media platforms offer you dopa on demand. But there’s a downside to gorging, no? Not to worry, there will also be ads from the medical-pharma industrial complex for products that manage (some of) the damage. Pundits claim we live in an “attention economy.” We don’t. Attention is just a metric for addiction. The addiction economy is broader, encompassing media, technology, alcohol, tobacco, gaming, pharma, and health care.
The Spice
The world’s most valuable resource isn’t data, compute, oil, or rare earth metals; it’s dopa, i.e., the fuel of the addiction economy, which runs the most valuable companies in history. Addiction has always been a component of capitalism — nothing rivals the power of craving to manufacture demand and support irrational margins. Sugar and rum were the dopa-delivery systems and currency of the Triangle Trade. Later, the British East India Company was the Sinaloa Cartel of the 19th century, producing and distributing a product China became addicted to: opium. At its peak in the last century, Big Tobacco acquired customers with TV ads and endorsements from doctors, but the addictive ingredient, nicotine, is how the industry extracts $86k to $195k per customer — and costs those customers $1 million to $2 million in expenditures, opportunity costs, and health-care expenses.
Historically, the most valuable companies turn dopa into consumption. Over the last 100 years, 15 of the top 30 companies by cumulative compound return have been pillars of the addiction economy. The compounders cluster in tobacco (Altria +265,528,900%), the food industrial complex (Coca-Cola +12,372,265%), pharma (Wyeth +5,702,341%), and retailers (Kroger +2,834,362%) that sell both substances and treatments. To predict which companies will be the top compounders over the next century, consider this: Eight of the world’s 10 most valuable businesses turn dopa into attention, or make picks and shovels for these dopa merchants.
A Higher Love
Given a choice, most lab rats will pick sugar over cocaine. They’ll even self-administer electric shocks for a sweet boost. Sugar stimulates our reward system 20x faster than cigarettes. Food companies engineer processed foods, not to maximize nutrition, but to hit the so-called “bliss point” — the exact combination of saltiness, sweetness, and other tastes that makes their product delicious, but not so delicious that consumers feel sated after a small serving. In other words, their food is engineered for more, not nutrition.
The industry profits at the expense of its customers’ health. According to a 2022 meta-analysis, 20% of American adults are addicted to food. Consumption of processed foods raises your mortality rate by 25%. The U.S. has a diabetes epidemic and an adult obesity rate of 40%. Compounding this public health crisis, food companies have a history of purchasing their competitors: diet companies. In 1978, Heinz bought Weight Watchers for $72 million. Unilever paid $2.3 billion for SlimFast in 2000. Nestlé purchased Jenny Craig in 2006 for $600 million. In 2010 the private equity firm that owns Cinnabon and Carvel ice cream purchased Atkins Nutritionals. (Most of these diet brands were later sold.) These acquisitions are akin to Pablo Escobar buying the Betty Ford Center.
Breaking Bad
McDonald’s used to brag, “one billion served.” Considering the history of weight loss and diabetes drugs — desoxyephedrine, fen-phen, metformin, etc. — pharma might just as easily brag, “billions prescribed.” After the food industrial complex makes people sick, we hand them over to the health-care industrial complex to treat the chronic conditions of these lifelong customers.
GLP-1 drugs are the most effective weight loss drugs to date, as they make us feel fuller for longer and suppress hunger cravings by modulating dopa levels. About 12% of U.S. adults have now taken a GLP-1, and the average GLP-1 user spends 11% less on food and beverages. But it’s early days for GLP-1s. Cost remains a barrier, and only one-third of employer health-care plans cover GLP-1s for nondiabetic patients looking to lose weight. Anecdotally, a Bloomberg Businessweek profile of Bowling Green, Kentucky, where 4% of the residents take GLP-1s, tells us that restaurants, grocery stores, health-care providers, gyms, and clothing retailers are all feeling the GLP-1 impact. If 60 million of the roughly 100 million U.S. adults who are obese took the drugs, Goldman Sachs estimates GDP could grow by more than 1%. As their full impact and second-order effects play out, GLP-1s will likely transform the economy.
Smart (Phones) Needles
Some people (smokers) used to reach for a cigarette immediately after finishing a meal; in the movies they’d reach for a cigarette after sex. Today most restaurants are smoke-free, but phones are ubiquitous before, during, and after every meal. We used to pick up a landline (Google it) to “reach out and touch someone.” Now that everyone has a cellphone, we spend 70% less time with our friends than we did a decade ago. We’re addicted to our phones, and even when we’re not seeking our fix, our phones seek us out — notifying us on average 46 times per day for adults and 237 times per day for teens. In college, I spent too much time smoking pot and watching Planet of the Apes, but when I decided to venture on campus, my bong and Cornelius didn’t send me notifications.
The compounders here are in your pocket. Sales of iPhones have made up roughly half of Apple’s revenue since 2009. Of late, the company has rolled out screen time tracking and other anti-addiction tools. Apple’s brand positioning is a bartender opening an AA chapter. Alphabet is incentivized to maximize screen time, as 76% of its revenue comes from targeting eyeballs with advertising. Alphabet is a niche player in the device market, but its Android OS (73% market share) is the perfect gateway drug, as it’s open-source and free.
It took us 20 years to wake up to the danger of opiates, and about the same for the phone. But it is happening. Eighteen states have passed laws restricting the use of phones in school, and roughly three-quarters of schools have policies restricting their use in the classroom. Yondr, a firm that makes locking pouches for phones, has increased sales to schools by 10x since 2021, to $2.1 million.
Anxious & Depressed
When Mark Zuckerberg released a video announcing the end of Facebook’s fact-checking program, Jimmy Kimmel joked that Zuck was “dressed like a molly dealer from Chechnya.” The shoe fits. The difference: MDMA makes you euphoric, while social media makes you anxious and depressed. As my NYU colleague Jonathan Haidt put it, the unconstrained combination of phones and social media has been “the largest uncontrolled experiment humanity has ever performed on its own children.” So far, the results are a mental health crisis: Eight percent of teens are addicted to alcohol or drugs; 24% are addicted to social media.
Fentanyl
Unlike other platforms, TikTok is built around affinities, not the social graph. If chasing likes from our friends is digital heroin, TikTok’s AI is fentanyl. The algorithm rapidly calibrates what triggers a user’s dopa response by feeding them hundreds of videos every hour, turning the user into a blissed-out zombie. According to a lawsuit filed by the Kentucky attorney general, users can become addicted to TikTok within 35 minutes. The same lawsuit cited TikTok’s own research, which stated that “compulsive usage interferes with essential personal responsibilities including sufficient sleep, work/school, and connecting with loved ones.”
Weapons of Mass Addiction
We’re hard-wired for addiction. We’re also wired for conflict, as competing for scarce resources has shaped our neurological system to swiftly detect, assess, and respond to threats — often before we’re aware of them. As technology advances, our wiring makes us more powerful and more vulnerable. We produce dopa monsters at internet speed. We can wage war at a velocity and scale that risks extinction in the blink of an eye.
Our Worst Instincts
Human beings evolved in small, cooperative groups, where loyalty meant survival. This instinct makes us naturally favor in-groups (our people, our nation, our ethnicity) and distrust out-groups (foreigners, outsiders, “the other”). Genocide exploits this instinct by amplifying group identity and dehumanizing outsiders, making mass killing seem justified or even necessary. Violence, repeated, becomes routine. What was unthinkable on Monday becomes “standard procedure” by Friday. Removing the security details of our political adversaries, who are under real threat from foreign enemies, is simply repackaged violence. In sum, it’s Tuesday in America.
80
This week marked the 80th anniversary of the liberation of Auschwitz by the Soviet Army. Our proudest moment, in my view, was America’s role in arresting this genocide, which represents the very worst perversion of human instincts. Now the U.S. risks becoming the font of this abomination. The president has repeatedly said that “immigrants are poisoning the blood of our country.” The world’s richest man is making Nazi gestures and told a far-right group in Germany, “It’s good to be proud of German culture, German values, and not to lose that in some sort of multiculturalism that dilutes everything.” Our (worst) instincts remain static — it’s our technology that’s evolving.
Instinct morphing into fear and demonization, coupled with propaganda, rail transport, and Zyklon B gave rise to the largest murder site in history. What might happen if these same instincts take root in a nation with unprecedented industrial might, armed with social media and AI? We need to cauterize this hate. People/bots in the comments section will accuse me of TDS. Have. At. It. The road to fascism is littered with accusations of overreacting. So … color me overreacting. It’s both the correct response, and impossible to overreact.
Never forget,
P.S. This week on Prof G Markets, my co-host Ed Elson and I discussed the Stargate Project, the rise of Oracle, and my stake in La Equidad Football Club. Listen and follow here on Apple or here on Spotify.
P.P.S. This is the last day to get 30% off AI Academy membership with Section, using the code GALLOWAY30. Sign up here.
For a moment there, I thought you’d come to your senses and finally found empathy for the genocide of Palestinian people… next time (maybe).
Be careful about rat studies. Rats are social creatures, and most drug studies test rats locked in metal cages – think solitary confinement in the worst prisons! Of course they drug themselves to death.
Google “rat park drug study” (there’s a wikipedia page) to learn what happens when rats are offered drugs in a natural, social environment – they don’t want them!
Great read, but……
Let’s us not forget that liberals have killed far more than zyklon B with abortion. And you/they still vote for, and support that culture of death. It makes no sense to me how one can talk about the possibility of another nazi Germany all while currently supporting one.
Let’s not forget that right wingers are dishonest trash.
Fantastic as always Scott but don’t invest in R*ngers ffs, invest in a club in Scotland that have supporters love the club with all their being, go 6 miles west of Govan, love Paisley and buy the glorious Paisley Brazillians aka St Mirren FC!
As always-a thought provoking article. Alarming-but great!. Scott- you’re the Wayne Gretzky of trend observation (as you see the Ice differently than most) John Hyman’s reader comments on the Drug Industry are spot on! Watching CNN commercial breaks on the weekend is often like watching a king-sized Drug infomercial these days…Keep making us Think–that’s your Special Purpose.
A great way to avoid constantly thinking about food, is to plan ahead what you are going to eat, and have it on hand ready for when you need the meal. That’s an Arthur Brooks one.
If you do something for 30 days, you create a habit and can likely keep doing it for life. That’s why fast food campaigns want you to come back and buy on many occasions to enter their competition. They want you to create a habit where they are the fix.
Young adult (22) here. Yes, we do read Scott’s newsletter. These statistics are harrowing if not horrifying. As if the obesity crisis wasn’t bad enough when I was born. Unrestricted internet and social media access makes you stupid (or, to use the medical term, tired and depleted). When you are made stupid, you consume more overprocessed products (“eat more food”) almost sounds like a misnomer. This makes your health worse and the cycle kicks off. It’s terrible, and they know exactly what they’re doing, a great and unprecedented abuse of human faculties and biology. But I have faith. Please keep spreading the word.
Technology is a drug but we don’t have to let it be that way. Read a book, go for a walk, talk to a friend. Kill your phone. Resist. Sit and think. Lead by example. It doesn’t have to be this way and we all know it.
You sir are the dopa. Just can’t quit you.
Amen to that brother!
Too many are whistling past the grave yard. I heard it from Mr. Reed this morning.
Powerful stuff, Scott. When you’re defending humanity with truth there is no overreaction.
Scott you are a gifted writer. I do enjoy most of your stuff. The phone and social media you are spot on. But the sheer hatred that you have for Trump and Musk colors your opinions and makes you look like a beaten, sore loser that needs a therapist. I’m sure you already have one of those though. America is on the right path…give them a chance and quit the nazi BS! I thought you were smarter than that.
Steve, Scott is vastly smarter than you, with your utterly dishonest comment.
I do not always agree with Scott. However, he provides context that signals where we are headed if we do not push back and speak out.
People are addicted to crucifying Trump.
There are deeply psychological reasons for this that you will never ever be able to address or fix in a post.
Hating on Trump is a drug for some people and you can spot the junkies that can’t let it go from a mile away.
“Raging against Trump is a powerful (and fun) drug” – Tarlov
Galloway writing a post about addiction and has to take a few moments to do a few lines / take a few shots at Trump, Musk, and whomever else he’s been programed to hate on this week.
Watch.
These people can not stop.
This is their crack cocaine.
It used to be a very fashionable drug, everyone was doing it, but as time goes on it’s not going to remain trendy and people are going to start acting with disgust towards all these Faces of Meth losers.
Just watch.
No, Numbers, that’s grossly stupid and dishonest, as always with right wingers.
You have to admit it’s stupid of Musk to use the Nazi gesture so blatantly. He could easily have devised something ”fresh” – like extending his left arm instead of his right. But then, he never had to. He knows most Trump voters can’t see the pattern anyway.
The Nazis can see it and they’ve been very vocal about how it pleases them.
I am hugely glad to hear Scott comment on Trump because he is a serious risk and danger to America’s economy, security and future.
America cannot achieve anything by itself, it can only do it with partners who believe that America’s government is making decisions based on sound judgement. There is nothing remotely sound or intelligent about Trump, he is a ignorant, belligerent corrupt fool. The other day Trump said Spain was part of the BRICS. It’s not, it’s in the EU and a US ally. Spain is a member of NATO, which is America’s most important security partnership.
I am thinking US security services will give Trump six months in office, long enough for MAGA voters to realise his decisions are causing inflation, and then find a way to take him out.
I do not make this comment lightly!
And how many of your kin were murdered at Auschwitz?
Another phenomenal post, Scott, thank you!
You are a personal hero of my Scott. So proud you have taken your talents to making the world a more informed and decent place. You are brutally honest and brave. Thank you.
Nailed it.
The subject could be “Better techniques for Rose Pruning” and I am confident you would wind up warning about the dangers of Trump and the US “right”’ (i.e. people against genital mutilation and chemical castration of their children, rampant antisemitism on campuses, weaponized legal processes, media interference by the executive branch(the latter 2 being hallmarks of Stalinism/fascism you choose) and attempted assassinations). The biggest lesson from WW2 was that the German people were driven into Hitler’s arms because of the humiliating and unworkable Treaty of Versailles and even more by then threat of Stalinism, which was taking place just a few hundred miles away, which at the time did seem like the worst ideology ever to be adopted by man. Your fears of Trump are pretty overblown dare I say hysterical, but make no mistake there is no Trump with Obama and Biden and Harris et al. Fail to understand and address that at your peril.
I’m pretty sure that the biggest lesson from WWII (not that it was entirely new news) is that human beings can be led to do terrible things to other human beings under the right circumstances, and that sociopathic, narcissistic leaders can take advantage of this to create those circumstances leading to the slaughter of millions of innocent people. Nothing that “came before” excused the atrocities of WWII Nazi Germany, and nothing his predecessors did or did not do will excuse any of Trump’s abuses and those of his followers.
I certainly hope that Trump evolves into a more empathetic, informed and thoughtful leader in his second term – but none of the chaos, cruelty or mindboggling flip-flopping I’ve seen in these first 2 weeks makes me optimistic on that front.
All right wingers are fundamentally dishonest, you especially George.
My grey matter is in sync with your postings yet my budget isn’t. A donation works for me. At this time I just can’t afford you yet I can’t afford not to follow you.
I’ve been screaming for years now “History is repeating” and now trump/musk Migrants are just the new Jews, gays and Catholics
So, as a Jew, I find comparing Jewish Europeans, living legally in Europe for at least a thousand years, with cartel-smuggled gangbangers, terrorists and otherwise illegal immigrants to be extremely offensive. So, as a Jew, comparing Jewish Europeans, living legally in Europe for at least a thousand years, with cartel-smuggled gangbangers, terrorists and otherwise illegal immigrants is offensive. Keep my people’s name out of your stupid mouth. my people’s name out of your stupid mouth.So, as a Jew, I find comparing Jewish Europeans, living legally in Europe for at least a thousand years, with cartel-smuggled gangbangers, terrorists and otherwise illegal immigrants to be extremely offensive. It is like saying if you abhor the murder of my 4 year old twin uncle and aunt on Mengele’s table, you should also abhor the execution of John Wayne Gacy. Keep my people’s name out of your stupid mouth.
Edited: So, as a Jew, I find comparing Jewish Europeans, living legally in Europe for at least a thousand years, with cartel-smuggled gangbangers, terrorists and otherwise illegal immigrants to be extremely offensive. It is like saying if you abhor the murder of my 4 year old twin uncle and aunt on Mengele’s table, you should also abhor the execution of John Wayne Gacy. Keep my people’s name out of your stupid mouth.
George, as an ethical Jew I find you and your extraordinary dishonesty to be extremely offensive.
George, you translated “migrants” into “cartel-smuggled gangbangers, terrorists and otherwise illegal immigrants”. You are pathetic racist scum and an insult to all ethical Jews.
I thought the value of something was based on scarcity. Dopa, or the means to bring it on, are abundant. I agree that it is powerful, and we are addicted to anything that leads to a hit, but I question its actual value.
All that said, or written, thank you for what you do. I appreciate your honesty and insight. People who are so open and give so freely are in short supply.
99% of the time, when someone says “I thought …”, it amounts to a profession of ignorance uttered with a sense of superiority.
Even in pure market terms, *cost* is based on the intersection of supply and demand, and demand is based on value. (e.g., pictures created by children smearing feces on paper are uncommon but don’t fetch a lot)
Wonderful insights Scott. While we are at the us/them continuum we shouldn’t ever forget the two Bombs that were dropped on Japan. Although not the scale of Auschwitz, it was horror non the less. Looking in the mirror is always more difficult but helps us deepen our distrust of our present political environment. After visiting Auschwitz this summer I am happy to report that thousands of people a day visit there to bear witness. Lastly, Hitler rose to power with 43% of the vote in Germany. He was appointed in January 1933, by March 1933 the German Congress passed the Enabling Act giving him the ability to do whatever he deemed necessary to the country, even if it violated the German Constitution. The US Supreme Court came very close to that this past summer and our Congress is ready to support Trump to the end.
“Hitler rose to power with 43% of the vote in Germany.”
This is mistaken. Members of the Nazi Party running for the Bundestag received a total of 37% of the popular vote, but Hitler never received such a number.
This commentary is so “right on,” to use the slang of the ‘60’s. The worst thing in my opinion is the time suck that these addictions take. With more time I can hope that more people would take that time to understand some aspects of our very complex world and even more importantly take action to explore remedies to the myriad problems. Here’s an example. Last night I listened to presenters to my very local environmental group that works to preserve and improve an urban creek watershed. They have had many small successes despite every government agency putting up road blocks. I can guarantee the members do not put their time into social media, podcasts and streaming even though I suspect some will watch the Super Bowl with family and friends and maybe imbibe a bit. For them that is a unique time to indulge because the rest of their precious non work time is spent on things that affect our community and our world.
I am a guy in my 7th decade. I suffer from more than one of these addictions (sugar, attention). My shame comes from having lived a majority of my decades without these things. I had others of course. I smoked tobacco for 14 years and I made my high school varsity bong team. Those I put away more than 3 decades ago. So I know how to drop a habit. IDK – confession over.
Scott, you rant about the addiction economy, but let’s be real—you sell attention for a living. Your entire brand thrives on the same principles you criticize. You run a media business, pump out viral rants, and optimize engagement just like the platforms you call out.
The irony? If you were truly against this system, you’d log off, kill the algorithm, and walk away from the dopamine factory. No social media, no engagement hacks, no corporate gigs. But you don’t. Instead, you weaponize the same tactics you condemn—outrage, virality, and attention economics—to sell your books, newsletters, and NYU classes.
All that said, I enjoy reading your rants, so I guess I’m just as “addicted” as you.
Be careful not to confuse “attention” with “addiction.” Scott doesn’t sell addiction. He sells information, thought leadership and an informed point of view, all expressed in his own unique and penetrating style. If the quality of what he does encourages his readers to develop a habit — which is different from an addiction — of listening to what he has to say, then he’s doing his job well, not to mention serving the greater good.
The worst thing Scott could do would be to pack up shop and say “I won’t participate, I won’t contribute.” Engagement is honorable and takes courage. The converse is also true.
BQS4, you rant about Scott, but let’s be real–you’re a wretched dishonest hypocritical git.
I am not a bot!
Mostly I think you are bang on – as usual – but I think you could have gone a big step further. Man has always been susceptible to pleasure/addictions. Until WWII self-control was considered a virtue essential for survival. Now we have been trained to ignore/avoid responsibility for our own actions. How can it possibly be virtuous to create a drug that will cure a disease that your pals created? Oh yes, the shareholders will love it – they can afford it – are you one? This gets back to primary school education, parents driving kids to school who need that exercise because they live in a suburb that makes them car dependent – a drug in itself. You get my drift. Thank you.
Hey Scott,
I like the post but disliked the ending. It seems much to do about nothing. It seems like it’s not even your words, just what you feel like needs to be said because of your in-group identity. Very phony and inauthentic vibes.
Life is so rich. Thanks for the meat or the article, but not the conclusion.
It’s impossible for Scott to write a column without his terminal TDS surfacing.
George, it’s impossible for you to write anything without demonstrating that you’re a stupid ignorant lying fascistic fecal stain on humanity.
Since are talking about addiction and Rats, your readers may be interested in knowing about “Rat Park”, a series of experiments conducted on Rats and Addiction where the Rats were not kept in cages, and in fact, were studied in a ‘spacious park’ replete with plentiful resources. Tl;dr .. the experiment results claim that Rats were able to wean themselves off morphine when placed in Rat Park after being force-addicted in a cage. When given the choice of morphine laced water or water, Rats in Rat Park chose water and not water laced with morphine (the choice of caged Rats). Cortisol, DHEA, Serotonin, and Dopamine. As individuals if we’re able to understand the interplay then there’s the ability to break free from the cycle, or else, we’re just another statistic.
Nice piece. A suggestion: don’t be like other people. Ever. The first time I tried this was in Vietnam when I determined in advance not to drink or have other bad substances so as to be fully aware every minute. I was lucky to be with a handful of great companions who had the same view. From time to time in following years I drank too much and didn’t always eat properly but periods of no bad habits became more frequent and longer, helped by a wonderful woman (a famous feminist) who encouraged me. Good habits give you a huge edge and it has brought me to age 80 with none of the health problems that shorten lives. Think of it as a personal war against bad stuff and the boring annoying people who tempt you to dull yourself against them. I don’t use gadgets much either, and have learned that it takes only a one minute perusal to get all there is to know from the NY Times and Wapo. Have to say I read your work all the way through.
Fantastic comment and perspective. At 61, I agree wholeheartedly. And thank you for your service and sacrifice.
Great article but I find it odd you overlooked the pharmaceutical industry. Between January and August 2024, the true MVP of TV spending, Big Pharma, dished out a casual $3.4 billion on ads. That’s an 8 percent increase from last year—because why waste money curing diseases when you can funnel it into 15-second clips of smiling actors enjoying imaginary side-effect-free lives?
Take this shocking revelation: in 2022 alone, the top ten drug companies shelled out $10 billion on advertising—a jaw-dropping figure designed not to save lives, but to shove smiling actors and sunsets into your living room. Meanwhile, they insist sky-high prescription costs are mandatory to fund their groundbreaking discoveries (spoiler alert: it seems “groundbreaking” includes cutesy jingles and talking puppies in their commercials).
Lastly, were you aware that the United States is one of only two countries (shoutout to New Zealand!) where direct-to-consumer drug advertising is even allowed? Lucky us! Because who doesn’t love being guilted into demanding a medication they can’t afford thanks to what amounts to pharmaceutical propaganda?
Eh? He mentioned pharma throughout the piece … did you actually read it?
Excellent piece, Scott.
Thank you…..I needed that!
Good one this week! I almost always learn a little. These posts are becoming… habit-forming. 😉
True dat, boss. Still, if Capitalism is addiction based, then please write about the 12 step program to get us clean and sober.