The Economics of Alcohol

Over at Fermentation, Tom alerts us to some interesting statistics:

People who consume alcohol make more money than abstainers.

To be specific, a study published in the Journal of Health Economics in 1998 found:

U.S. males who drink alcohol make 7% higher wages than do abstainer.
Women who drink receive about three and one-half percent higher wages than do abstainers.

Tom then asks Why this occurs.

Statistics can be interpretted in many ways of course, so take my opinion with a grain of salt. The issue here is cause and affect.

Drinking does not cause people to make more money. Rather the inverse is true: making more money causes people to drink more, as people who make more money tend to have more disposable income. Alcohol, for people not addicted to it, is a luxury item.

I can hear some of you saying “Yeah, but Kate – aren’t the costs of a bottle of vodka and a bottle of wine roughly the same?”

At first glance, yes, it does appear that a bottle of wine and a bottle of vodka can have a similar price…roughly twenty dollars depending upon where you live. But the vodka is more cost efficient than wine. Ask yourself this: How many glasses of wine can you get from a bottle? Compare that with how many glasses of screwdrivers you can make with one bottle of vodka.

Additionally, once you open a bottle of wine, it needs to be consumed within a relatively short period of time or it will go bad. An open bottle of Vodka has no such concern.

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