Can Binge Drinking Save Social Security?

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A coalition of college presidents has been pushing states to lower the drinking age as a way to discourage problem drinking on campuses.

But here’s one unintended consequence of teaching young people responsible drinking habits: it could make Social Security bankrupt faster.

A 2004 study by Frank Sloan and Jan Ostermann at Duke University found that heavy drinkers contribute slightly more to Social Security, through their higher average lifetime earnings, than nondrinkers do. What’s more, since alcohol abusers tend to die sooner than moderate or nondrinkers, they draw less money, over time, from the Social Security trust fund.

Their conclusion: the elimination of heavy drinking (three or more drinks a day) from each successive group of American 25-year-olds would cost the Social Security trust fund $3 billion over the cohort’s lifetime.

According to the authors:

From the vantage point of society as a whole, heavy drinking redistributes wealth from heavy drinkers to others. Thus, if public health programs were to succeed in reducing the rate of heavy drinking, [Social Security's] future financial status would be even worse than has been projected.

The study drives home the health cost of irresponsible drinking, but with a twist: in this case, binge drinking can have positive externalities.

On another note, one of the puzzling underlying findings in this paper is the relationship between moderate alcohol consumption and increased lifetime earnings. For men and women alike, people who report downing two or fewer drinks a day earn slightly more than teetotalers do, on average. Heavy alcohol use tends to negatively impact earnings, as you might imagine, but not as much as abstinence. Sloan and Ostermann aren’t clear on the mechanics of this relationship, but the science seems solid.

Does drinking lead to higher earnings, or vice versa?

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  1. PDB says:

    “found that heavy drinkers contribute slightly more to Social Security, through their higher average lifetime earnings”

    Is this because so many high income people (lawyers, traders, bankers, etc.) are heavy drinkers?

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  2. Laura B says:

    I think the argument that allowing kids to drink at a younger age will help prevent binge drinking problems overall is flawed. Sure, it will reduce problem drinking on campuses, because by the time kids get to college they will have learned a few important lessons about the results of binge dirnking, but I think that for the most part, binge drinking problems will simply shift to a younger age group. Looking at highschoolers that drink illegally today, it is hard to imagine binge drinking will cease to be a problem at all, hell, thats when I was in my binge drinking prime; it was old news by the time I turned 21. Additionally, when you’re talking about avearage wages compared to drinking habits, you are looking at a longer term statistic, people that are genetically inclined to be drinkers, or that are more likely too because of their relative affluence still will be regardless of what age they start drinking. I think Social Security would be just fine…or as fine as it was ever going to be…

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  3. jrnail23 says:

    I guess it makes sense that higher paying jobs are often more stressful, so it follows that those people would tend to have a drink or two when they get home from work.
    As is the case with so many social science studies, the causality is the real question here. Corelation doesn’t necessarily imply causality.

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  4. Valpey says:

    I can imagine a number of reasons why moderate drinking and wages would correlate but I am suspicious of causality.

    If I am currently a teetotaler, should I start drinking in order to earn more? Would I expect to be happier if I did?

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  5. noneother says:

    lowering the drinking age will also increase tax revenue!

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  6. Mitch says:

    Speaking in the broadest of terms, those people who are more socially adept are more likely to climb the corporate ladder and earn higher wages. People who are more socially adept are likely to consume a few drinks with friends and networking associates.

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  7. Mike Hates Music says:

    Makin’ stuff up:

    * some teetotalers abstain for health reasons that also interfere with their being able to hold a high-paying job

    * avoiding alcohol is a moral imperative for at least two groups that you expect to reap less of their women’s human capital their women: American biblical fundamentalists and Muslims

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  8. Kristen says:

    Kid’s are drinking underage today anyway. Even if they aren’t buying it, someone else if buying it for them and paying the tax on it. How will lowering the drinking age increase tax revenue?

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