Drinkers Earn More Than Non-Drinkers:
Today the Journal of Labor Research published an interesting report, summarized in this 20-page document, noting that people who drink alcohol make more money than people who don't — and people who go out to bars make the most money of all. From the executive summary:
UPDATE: I fiddled with this a bit to note that the document is more of a "report" than a "study."
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 General Social Survey, we find that self-reported drinkers earn 10-14 percent more than abstainers, which replicates results from other data sets. We then attempt to differentiate between social and nonsocial drinking by comparing the earnings 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 additional 7 percent on top of the 10 percent drinkers' premium. These results suggest that social drinking leads to increased social capital.What a perfect report for a Friday afternoon.
UPDATE: I fiddled with this a bit to note that the document is more of a "report" than a "study."
But thats a less fun interpretation.
How about Jewish drinkers, then?
The real test would be to use longitudinal data. Fortunately, many panel studies include questions on both alcohol and earnings and some of them even have social capital or network questions.
One day, back when I was a spreadsheet monkey, my boss came into my office after a day of getting ripped to shreds in cross-examination at trial. Ooops. Lo and behold, dressing the pig up in lots of pretty equations don't make it a gurl! Imagine that. Ditto for cause and effect, especially in human relations.
That said, I've passed this paper around with an invitation to come out and play.
Ah, but its easier to pick up a drinking habit than to convert to Judaism.
I'd like to know if, in comparison, generally isolated and shy people are more conservative when it comes to drinking habits. It seems obvious to me that a correlation between personality and earnings could be established, what about bar frequentation?
Lets not forget that one can frequent bars (hence build/maintain their 'pub' social network) and abstain drinking. Could there be confusion between bar frequentation and alcool drinking?
This story would be an interesting explanation of the culture of three-martini lunches among businessmen closing deals. I don't know whether they really happen in significant numbers, and populists love to rail at them, but maybe they serve a business purpose and therefore should be fully deductible.
-dk
I doubt it. In my observations, people with higher income and greater wealth (unless they are obscenely rich and even some of those), tend to be more provident with their $$. And poorer people tend to be more improvident. People who can least afford to smoke cigarettes and play the lottery are every bit as likely if not more so to do so. Being poor or of modest income doesn't stop people from blowing their $$ in bars.
Totally anecdotal, impossible to extropolate from, but there we are... I'm going to grill a chicken...
Re Zarkov's point. Don't jump from one extreme of worshipping stats to the other. Multiple regression is very reliable when properly done. But I think Zarkov's criticism may apply here. There is some strange independent variable selection (number of siblings?) not grounded in good theory that I can see.
After all, having more cars is positively correlated with earning more, and nobody would conclude from that report that cars cause success.
Also, this is a great word the reporters have chosen, "earnings." So what does THAT mean? Is that gross revenues? Gross income? Wages? Self-employment income? After taxes? and, I can't help myself, I want to know if the "earnings" of the drinkers are calculated before or after all the $$$ spent on the booze is subtracted? I can certainly envision how "earnings" might have been manipulated in this report thusly: abstainers and drinkers gross "earnings" are the figure used, but the abstainers do not spend any $$ to buy all that expensive booze, whereas (in order to build "social capital") the boozers, I mean the drinkers, have to spend lots of $$ on all that booze they drink, and even more $$ to treat all their rather large circle of alcoholic "social capital" friends to several rounds.
So, in fact, this report may not even reach a valid conclusion (even though the desk top publishing was first rate), because it may be that after the drinkers booze-related spending is subtracted fom the "earnings" (if "earnings really mean gross "earnings"), then we would learn that the drinkers are really taking on debt (loans) to support their overspending habits. But the reporters don't worry about that little glitch, do they?
See, I think EV is trying to teach us that we are not supposed to take statistical reports at face value, since they can look scientific, but really be a whole bunch of hogwash to influence more people to support the idea that drinking is a *good* thing. (But I am certainly not poaching on EV's mathematical greatness, not me, because everyone knows I can't do algebra).
And this brings back memories of every day when I walked across the street between my law school and business classes; the problem on the business side of campus was always leaving out the cost of those *other* contingent expenses drinking can cause -- such as having to pay the personal injury verdict for that $1 M drunken driving accident the "social capital" career-climbiing drinker caused when he got a little too drunk, fumbles with his keys, and tried to drive home.
On another note, I wonder how the report on drinking "earnings" would compare to building "social capital" leading to higher "earnings" for the reefer set. In the Medical Marijuana States, of course.
As someone who has worked extensively with Russians and non-Russians, I can tell you that there's no tradition of three-martini lunches among businessmen closing deals in the West. In Russia, the tradition is drinking beer or vodka, not martinis. Although there was a damn good martini bar in Denver I went to on a deal once.
I suspect the causation is the other way. As with most forms of recreation (including legal and illegal drug use), increasing income usually makes for increased disposable income, and thus additional economically practical recreational opportunities. Speaking only for myself, whenever I've been in a financial pinch, the booze is the second thing to go. (Eating out is the first — no addictive threshold to overcome, and I'm a durn good cook.)
Some things I see missing from the regression are urban/rural, as noted above, health (does the person abstain because he has severe health problems, which also means he lives on disability payments), and past drinking (did the person ruin his life with alcohol, join AA, and now is putting himself back together).
That said, even if the result survived, only its size would be surprising,a nd we wouldn't infer causality. I wouldn't be surprised if people who prefer pork to beef also earn more--- such things are correlated with a lot of omitted variables.