It has been a persistent phenomenon in many societies that a large proportion of alcohol consumption takes place in company of other people. While the phenomenon of social or public drinking is well discussed in disciplines such as social psychology and anthropology, economists have paid little attention to the social environment of alcohol consumption. This paper tries to close this gap and explains social drinking as a trust facilitating device. Since alcohol consumption tends to make some people (unwillingly) tell the truth, social drinking can eventually serve as a signaling device in social contact games.
This is a preview of subscription content, access via your institution.
Buy single article
Instant access to the full article PDF.
Price excludes VAT (USA)
Tax calculation will be finalised during checkout.
The figure D is assumed to include all costs of drinking, including possible external costs as well as the risk of becoming addicted. If we assume that individuals directly receive utility from alcohol consumption, D might be interpreted as the difference between the costs of drinking and the utility received. Hence, D can take positive as well as negative values.
Since we assumed that δ = ω, a type-L individual is at best indifferent between not drinking and staying alone.
Allison, D. (1992). Bastard out of Carolina. New York: Plume/Penguin.
Auld, M. (2005). Smoking, drinking, and income. Journal of Human Resources, 40, 505–518.
Bagwell, L. S., & Bernheim, B. D. (1996). Veblen effects in a theory of conspicuous consumption. American Economic Review, 86, 349–373.
Becker, G. S. (1991). A note on restaurant pricing and other examples of social influences on price. Journal of Political Economy, 99, 1109–1116.
Becker, G. S., & Murphy, K. M. (1988). A theory of rational addiction. Journal of Political Economy, 96, 675–700.
Buonanno, P., & Vanin, P. (2013). Bowling alone, drinking together. Empirical Economics, 44, 1635–1672.
Bray, J. (2005). Alcohol use, human capital and wages. Journal of Labor Economics, 23, 279–312.
Douglas, M. (Ed.) (1987). Constructive drinking: Perspectives on drink from anthropology. Cambridge: Cambridge University Press.
Finkle, A., & Shin, D. (2013). A theory of alcoholics and workaholics. Economic Inquiry (forthcoming).
Frank, B., Haucap, J., & Herr, A. (2013). Social drinking versus administering alcohol. Unpublished Working Paper, University of Düsseldorf.
French, M. T., Maclean, J. C., Sindelar, J. L., & Fang, H. (2011). The morning after: Alcohol misuse and employment problems. Applied Economics, 43, 2705–2720.
Hennessy, M., & Saltz, R. F. (1993). Modeling social influences on public drinking. Journal of Studies on Alcohol, 54, 139–145.
Heufer, J. (2009). In Vino Veritas: The Economics of Drinking. Ruhr Economic Paper No. 158.
Ioannides, Y., & Loury, L. (2004). Job information networks, neighborhood effects, and inequality. Journal of Economic Literature, 42, 1056–1093.
Johansson, E., Alho, H., Kiiskinen, U., & Poikolainen, K. (2007). The association of alcohol dependency with employment probability: Evidence from the population survey “Health 2000” in Finland. Health Economics, 16, 739–754.
Jones, A. S., & Richmond, D. W. (2006). Causal effects of alcoholism on earnings: Estimates from the NLSY. Health Economics, 15, 849–871.
MacDonald, Z., & Shields, M. (2001). The impact of alcohol consumption on occupational attainment in England. Economica, 58, 427–453.
MacDonald, Z., & Shields, M. (2004). Does problem drinking affect employment? Evidence from England. Health Economics, 13, 139–155.
Montgomery, J. (1991). Social networks and labor market outcomes: Toward an economic analysis. American Economic Review, 81, 1408–1418.
Ormerod, P., & Wiltshire, G. (2009). “Binge” drinking in the UK: A social network phenomenon, Mind and Society, 8, 135–152.
Peters, B. L., & Stringham, E. (2006). No booze? You may lose: Why drinkers earn more money than nondrinkers. Journal of Labor Research, 3, 411–421.
Pesendorfer, W. (1995). Design innovation and fashion cycles. American Economic Review, 85, 771–792.
Pittman, D.J., & Snyder, C.S. (1962). Society, culture, and drinking patterns. New York: Wiley.
Sato, M., & Ohkusa, Y. (2003). An empirical study of alcoholic consumption and labor productivity in Japan. The Institute of Social and Economic Research Osaka University, Discussion Paper 581.
Stigler, G., & Becker, G. S. (1977). De gustibus non est disputandum. American Economic Review, 67, 76–90.
Sykes, R. E., Rowley, R. D. & Schaefer, J. M. (1993). The influence of time, gender and group size on heavy drinking in public bars. Journal of Studies on Alcohol, 54, 133–138.
Tekin, E. (2004). Employment wages, and alcohol consumption in Russia. Southern Economic Journal, 71, 397–417.
Van Ours J. (2004). A pint a day raises a mans pay; but smoking blows that gain away. Journal of Health Economics, 23, 863–886.
Vogel-Sprott, M. (1992). Alcohol tolerance and social drinking: Learning the consequences. New York: Guilford Press.
Ziebarth, N. R., & Grabka, M. M. (2009). In Vino Pecunia? The association between beverage-specific drinking behavior and wages. Journal of Labor Research, 3, 219–244.
For helpful discussions and comments we want to thank Björn Frank, Tobias Just, Mike Murphy, Christian Wey and an anonymous referee of this journal as well as conference participants of the Beeronomics 2011 conference in Munich. A very first version of this paper was written in 1997 while Justus Haucap was a visiting scholar at the Institute of Management, Innovation, and Organization (IMIO) at the Haas School of Business, University of California, Berkeley, the hospitality of which is most gratefully acknowledged.
About this article
Cite this article
Haucap, J., Herr, A. A note on social drinking: In Vino Veritas. Eur J Law Econ 37, 381–392 (2014). https://doi.org/10.1007/s10657-013-9412-1