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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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