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?


Martin Bishop

This same logic can be applied to health care. Every time we cure a disease, we're increasing people's life expectancy and the chance that they will eventually die of something slow and expensive. This drains more from Social Security and increases health costs. Economically speaking, it's best for people to go young (just after retirment) and fast.

Jim N

I am a regular drinker and have a high-paying job. I got a high-paying job because I went to college. I started drinking while I was in college. It all seems to fit in my case.

sam

Don't really have much to comment on this entry. I just wanted to say that the Chevron "Will You Join Us" advertisement on the right side of the page is the most annoying advertisement I've ever come across on the internet.

Cameron

I think the higher earnings over a lifetime has to do with the social networking one can do in social drinking situations. There are many, many ways our Congress could fix Social Security. Legalizing marijuana and taxing it, ending the leviathan of subsidy for everything, not funding Vietnam-like occupations, et cetera.... One thing that I haven't heard anyone talk about when reducing the drinking age is doing it for certain types of alcoholic beverages only. Maybe 18-21 year-olds could buy beer, but not wine or liquor. I'd also like to point out the youths aren't the only people with drinking problems...

Doc

I saw the stats for (I believe) NY and CT when this concept surfaced a while back. Looking at alcohol-related automobile deaths over the period of a few years on either side of the drinking age being lowered to 18 then raised from 18 to 21 there was no discernible effect. The death rate has been declining monotonically for several years - probably due to many factors including safer cars, changing attitudes, higher enforcement and others. But there was not meaningful effect when the age went down or up.

I'm in favor of the concept for colleges - perhaps it could be limited to on-campus sites with the college acting in loco parentis, something they've been avoiding for years.

Sonny Campbell

These are two separate issues that our society and leaders have to deal with. Lets focus on the real problem with social security -- that there is no real political impetus, just a whole bunch of folks sitting around playing with numbers.

This youtube video actually does a better job trying to explain the social security dilemma to everyone --

http://www.youtube.com/watch?v=jPqA4mcYOEo

Jamie

Maybe binge drinking for colleges students would lose some of its appeal if it is legal. I mean, in that age group, there's something exciting about being "rebellious" and doing something you're not supposed to do. Plus, you may not know when the next opportunity to be rebellious will be (since you can't just go into a bar and order a drink -- you have to obtain the alcohol through other means), so you might as well drink as much as you possibly can when you get the chance. But if it is legal for an 18-year old to go get a drink, perhaps it won't be such a big deal.

Brad

Another possible mechanism involved here: the cost of drinking necessitates a higher income.

Some examples:

- A low income mother can't go to a bar because she can't afford a baby sitter. At home she might drink anyway, but at the bar she would definitely drink.

- Dining out, which is very expensive, likely correlates to higher rates of alcohol consumption, which means people who can't afford to eat at restaurants as often might drink less.

- For my own part, as a starving grad student, the three first things cut out of my budget when I'm low on cash are (1) dining out, (2) night clubs, and (3) beer.

In a sense, this is like asking if cruise ships cause higher earnings. Or any other luxury item.

Jennifer

I don't think lowering the drinking age will stop binge drinking. Perhaps someone is aware of some research into the key age range during which binge drinking occurs? 18-21 will be high, but 22-26ish will surely rank as well.

Binge drinking is not primarily driven by the illicit nature of drinking underage, but rather by the age of the drinker.

gp

In any relationship-oriented business one has a budget as well as accounts to call on. These jobs pay well and require travel. It is far easier to drink heavily when the restaurant bill is on the firm and you will sleep in a hotel room upstairs.

I am a heavy drinker, and I gained this behavior from a high-paying job. Friends who cannot expense meals, as well as those who do not travel, do not drink anywhere near as much as me. They could all drink me under the table before we graduated college or high school.

I do believe intense, stressful jobs lead to more drinking.

Lin Young

This is the craziest thing I've heard of in a long time...well, except for the recent government bailouts of Wall Street.

John A. Dewar Jr.

Don't forget that heavy drinkers keep mental healthcare costs down by self-medicating.

Scott

I'm going to hazard a guess at strong collinearity between risk-taking and drinking in predicting earnings and that risk taking can lead to higher wealth. Also those with wealth have less fear of risk to begin with(they'll be fine even if they mess up a few times), so drinking is not a big deal for them.

Laura

The college presidents aren't passing on the problem to high school principals. If the drinking age is lowered to 18, most students will still be of college age. The college presidents want to be able to focus on the important issues re: drinking - moderating consumption, ensuring student safety, encouraging developing responsible attitudes towards alcohol - rather than attempting to police illegal activity by 3/4 of a campus and control the activity by the remaining students.

Ben

Seems like these college presidents just want to hand down their problem to high-school principals. Maybe these college presidents should start earning their higher average salaries and deal with the problem themselves.

Will

Heavy drinking lower social inhibitions, which leads to more networking. And larger social networks lead people to more and better jobs and, in at least some professions, improve productivity.

(Being able to drink with a client will in most cases improve the relationship, which means more sales.)

Imad Qureshi

What about externalities associated with heavy drinking.

Ben

If college students can't handle drinking responsibly, what makes anyone think high school students can?

Valpey

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?

noneother

lowering the drinking age will also increase tax revenue!