Does Drinking Truly Cut Down Individual Income?

Abstract

This paper examines whether drinking frequency is related to residents’ income. Based on National Longitudinal Survey of Youth (NLSY) data, we find an inverted U-shaped relationship between them. Then, residents' drinking frequency in 1989 is utilized as an instrumental variable to modify the endogeneity, verifying the result that moderate drinking will increase residents' income and the best drinking frequency is 15.03 times per month. We explain the conclusion from the mechanism of improving health status and increasing social intercourse opportunities. On this basis, a gender heterogeneity analysis is carried out on the impact of drinking frequency on income. According to the results, the income promotion effect and optimal drinking frequency of moderate drinking in men are significantly higher than those in women. Moreover, the income of women in childbearing period is mainly affected by marriage and children, while drinking behaviour is not closely related to it. These results shed light for the formation of residents' healthy drinking habits and provided substantial evidence for measuring the economic effect on alcohol consumption.