Does drinking really decrease in bad times?

Abstract

This paper investigates the relationship between macroeconomic conditions and drinking using individual-level data from 1987 to 1999 interview years of the “behavioral risk factor surveillance system” (BRFSS). We confirm the procyclical variation in overall drinking identified in previous research using aggregate sales data and show that this largely results from changes in consumption by existing drinkers, rather than movements into or out of drinking. Moreover, the decrease occurring during bad economic times is concentrated among heavy consumers, with light drinking actually rising. We also find no evidence that the decline in overall alcohol use masks a rise for persons becoming unemployed during contractions. These results suggest that any stress-induced increases in drinking during bad economic times are more than offset by declines resulting from changes in economic factors such as lower incomes.

Introduction

Research emphasizing psychological responses to economic downturns predicts that alcohol use will rise during these periods as a form of self-medication for stress, with particularly large growth in abusive drinking and risky behaviors such as drunk-driving (e.g. Brenner and Mooney, 1983, Winton et al., 1986, Pierce et al., 1994). However, the causal effects of macroeconomic conditions are actually more complicated. A separate psychological literature emphasizes the role of job stress (e.g. Baker, 1985, Karasek and Theorell, 1990, Fenwick and Tausig, 1994, Sokejima and Kagamimori, 1998), implying that drinking may increase with the intensity of employment. Previous research also indicates that consumption is positively related to incomes (e.g. Skog, 1986, Sloan et al., 1995, Ruhm, 1995). Thus, stress-induced drinking during depressed periods might be partially or fully offset by reductions due to decreased earnings. The costs of drinking may also rise for employed persons fearing job loss. Conversely, the opportunity cost of alcohol use might fall if the negative consequences of intoxication during the work-day are reduced due to declining work hours or increased unemployment. Finally, drinking patterns could differ across groups. For instance, employed individuals might drink less while alcohol problems increase among the newly unemployed (Catalano et al., 1993).

This paper analyzes the relationship between economic conditions and drinking using individual-level data from the “behavioral risk factor surveillance system” (BRFSS). Several features make this study unique. First, we consider a wider range of outcomes than in previous research, including differences in the responsiveness of “light” and “heavy” drinkers. Second, we examine the dynamics of the adjustment of alcohol use to changes in macroeconomic conditions. Third, we explore whether the cyclical fluctuations differ across population subgroups stratified by sex, race/ethnicity, age, and employment status.

Our investigation confirms the procyclical variation in overall drinking identified in previous research. In addition, we show that almost all of the fluctuation results from changes in consumption for existing drinkers, instead of entry into or exit from alcohol use. In fact, decreased drinking during bad times is dominated by reductions in heavy rather than recreational drinking. Although the strength of the macroeconomic variations differ across demographic groups, these patterns appear fairly universal. Finally, we uncover no evidence that drinking increases among persons becoming newly unemployed during bad economic times.