NCPA - National Center for Policy Analysis

DRINK MORE, EARN MORE

July 19, 2005

In addition to the well known health benefits of moderate alcohol consumption, economists report that the benefits from alcohol are also financial. In the Wall Street Journal, public administration professor Arthur C. Brooks (Syracuse University) explains the association between drinking and higher earnings:

  • If two workers are identical in education, age and other characteristics but one has several drinks each night after work while the other is a teetotaler, the drinker will tend to enjoy a "drinker's bonus" in the range of 10 percent to 25 percent higher wages.
  • However, research shows when drinking beyond about two drinks per day, wages start to fall.

While drinking and prosperity are clearly related, the reasons why remain obscure. Some economists believe the health benefits of moderate drinking make for greater productivity, while others argue alcohol is a social lubricant, helping people who drink together get along better and make deals.

In his own analysis, Brooks explored the relationship between alcohol and virtuous behavior, like giving to charity. He determined moderate drinkers tend to be more charitable than nondrinkers:

  • Some 54 percent of nondrinkers contribute to charity each year, giving an average of $1,100, whereas 62 percent of drinkers (one to two drinks per day) make annual charitable contributions of $1,200.
  • When comparing two people similar in terms of income, education and religion, the moderate drinker will give between $50 and $100 more to charity each year than the nondrinker.
  • However, as with wages, the alcohol effect has diminishing returns where just 40 percent of people drinking five or more drinks per day donate, giving only $230 per year on average.

Brooks says the only exception to the pattern of "charity" drinking is the case of giving to religious organizations, which sees a negative impact from alcohol use. So raise your glass to your favorite charity, but Brooks says stop at two and don't forget to write the check.

Source: Arthur C. Brooks, "Drink More, Earn More (& Give More)" Wall Street Journal, July 13, 2005.

For text (subscription required):

http://online.wsj.com/article/0,,SB112121945045684152,00.html

 

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