You booze, you … win?
USF Associate Professor of Economics Jeffrey DeSimone along with Pinka Chatterji, a health economist at the Center for Multicultural Mental Health Research and an instructor in the department of psychiatry at Harvard’s College of Medicine, have identified a correlation between high school binge drinking and increased earnings. Their paper, titled “High school alcohol use and young adult labor market outcomes,” was published by the National Bureau of Economic Research in September, has created a buzz at college campuses.
DeSimone has taught economics at USF for four years, and said he and Chatterji decided to collaborate two years ago after realizing the similarities between their individual research into the relationship between binge drinking and educational achievement.
“Pinka and I had both done some work looking at the educational outcomes of drinking – that’s one of my areas of research now – and Pinka had done some of that research in her dissertation,” DeSimone said. “And so, sort of putting those two areas together would be this project – looking at teen drinking and teen education, looking at the effect of it on their labor-market outcomes.”
Although previous studies have examined the correlation between drinking and wages, these studies were mainly concerned with adults. According to such studies, drinking was thought to be correlative with increased income, as it provided social capital in the form of networking opportunities. Another hypothesis maintained that drinking was associated with increased income as the activity signified expendable income in the first place. It was also thought that improved cardiovascular health often associated with drinking explained the relationship.
DeSimone and Chatterji’s research differs from these other studies as it specifically examines the relationship between high school binge drinking and increased income levels.
“Most – if not all – studies that were previously conducted were looking at adult drinking and adult earning,” Chatterji said. “Most were looking at the contemporaneous relationships between current drinking and current earnings, and we were looking at past drinking and its effect on future earnings.”
Chatterji and DeSimone examined students who were approximately 16 years old in 1990 and who reported binge drinking at least once in the two weeks preceding an interview. The study then examined these same students’ earnings 10 years later, DeSimone said.
“The coefficient on the past drinking while in high school variables is positive and pretty large,” DeSimone said. “So it would imply that 26-year-old males who reported binge drinking at least once in the last two weeks as of the 10th-grade interview earn 6 percent more than others, all else equal.”
DeSimone also said that he and Chatterji’s study took other factors into account, such as achievement, prior income and adult drinking, which could possibly explain the correlation.
“So basically we thought we would answer these pathway variables, and eventually the effect would go away, but all it did was get stronger,” DeSimone said.
The lack of explanatory variables led DeSimone and Chatterji to consider social factors, DeSimone said.
“We based upon our readings of some other studies and just talking to other people and just common sense,” DeSimone said. “We just started guessing that this had to do with some socialness of these people. They’re the ones who are social; they’re the ones going to parties – drinking parties – in 10th grade, so maybe they’re entrepreneurial in the sense that they’re less risk averse. You know, in the long run, you would think, the entrepreneurs are going to be the ones who have the real high wages.”
Chatterji agreed that the result is most likely due to personality traits like extroversion.
“We speculate that it’s probably not a causal association,” Chatterji said. “It could be that people who binge drink in high school have certain characteristics that we can’t measure very well in the secondary data set.”
DeSimone cautioned, however, that teenage binge drinking does not equate to higher wages.
“Remember that correlation does not imply causation,” DeSimone said. “We don’t believe that this means that because they drink in 10th grade. Males are 10 years later more likely to earn higher wages.
“We think that certainly it’s something, some other factor that we can’t control, that we’re just identifying. So it’s not that they drink (and) they earn more wages. The drinkers have these other qualities, and so it just emerges, the fact that they’re drinking.”