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No booze? You may lose: Why drinkers earn more money than nondrinkers

Abstract

A number of theorists assume that drinking has harmful economic effects, but data show that drinking and earnings are positively correlated. We hypothesize that drinking leads to higher earnings by increasing social capital. If drinkers have larger social networks, their earnings should increase. Examining the Gen-eral Social Survey, we find that selfreported drinkers earn 1014 percent more than abstainers, which replicates results from other data sets. We then attempt to differentiate between social and nonsocial drinking by comparing the earn-ings of those who frequent bars at least once per month and those who do not. We find that males who frequent bars at least once per month earn an addi-tional 7 percent on top of the 10 percent drinkers’ premium. These results sug-gest that social drinking leads to increased social capital.

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We thank Daniel Arce, Phil Cook, Rodolfo Gonzalez, Teresa Beckham Gramm, Nick McKinney, Tom Means, Jake Vigdor, and participants in the Faculty Development Endowment seminar at Rhodes College for helpful comments and suggestions. We gratefully acknowledge Rhodes College for supporting this research through a Faculty Development Endowment grant.

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Peters, B.L., Stringham, E. No booze? You may lose: Why drinkers earn more money than nondrinkers. J Labor Res 27, 411–421 (2006). https://doi.org/10.1007/s12122-006-1031-y

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  • DOI: https://doi.org/10.1007/s12122-006-1031-y

Keywords

  • Social Capital
  • General Social Survey
  • Wage Premium
  • Alcohol Outlet
  • Wage Penalty