“America the Addicted”: Nobel Laureate Spotlights Betting Boom in the U.S.

^{Pictured: Paul Krugman, Nobel Prize-Winning Economist}

Paul Krugman, the 2008 Nobel laureate in economics, has published an essay titled “America the Addicted” on Substack. The piece carries a telling subtitle: “Gambling — on sports, stocks, and crypto — is the new opioids.” In his essay, the renowned economist delves into the dangers of America’s growing appetite for gambling and unpacks the factors driving its rapid spread nationwide.

Betting vs. Smoking

Krugman compares the rise of gambling addiction to America’s earlier battle with tobacco use. Starting in the 1960s, state governments launched aggressive public awareness campaigns to highlight the health risks of smoking. Over the decades, these efforts dramatically reduced smoking rates, gradually stripping cigarettes of their cool image — despite no outright ban on their sale. With gambling, however, the trend is moving in the opposite direction.

Rather than becoming harder to access, betting is now easier than ever. No need to head to the racetrack — placing a wager now takes nothing more than a smartphone and a few taps.

Adding fuel to the fire is the widespread advertising for sports betting, which frames it not as a risky pastime but as a harmless or even entertaining activity.

Self-Destruction and Ponzi Schemes

Krugman argues that gambling exploits a deep-seated instinct for self-destruction. On a rational level, most people understand that gambling typically leads to losses. Yet, the industry thrives by tapping into this subconscious tendency.

He also takes aim at cryptocurrency trading and speculative stock investing, likening both to a Ponzi scheme*. As he explains: “Investors, their confidence and expectations buoyed by past price increases, bid up stock prices further, thereby enticing more investors to do the same, so that the cycle repeats again and again.”

Assessing the Scale

According to Krugman, the true scope of gambling’s threat — including its broader manifestations in financial speculation — won’t be clear until these so-called Ponzi schemes begin to unravel. He references economist Dr. Rudi Dornbusch’s crisis theory: “The crisis takes a much longer time coming than you think, and then it happens much faster than you would have thought.”

Krugman concludes his essay with a stark warning: “Lots more to say about all this. For now let’s just say that a huge addiction problem snuck up on America while we weren’t paying attention.”

* Ponzi schemes (or financial pyramids) operate by paying returns to earlier investors using the funds of newer participants rather than genuine profits.