Policy Brief

No Booze? You May Lose

Why Drinkers Earn More Money Than Nondrinkers

Executive Summary

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.


Bethany Peters is an economist with the Analysis Group in Dallas, TX. Edward Stringham is associate professor of economics at San Jose State University. She earned her Ph.D. from Duke University and taught at Rhodes College before joining the Analysis Group.

Edward Stringham is an Assistant Professor of Economics at San José State University and an Adjunct Scholar with Reason Foundation. He received his Ph.D. from George Mason University in 2002. He is winner of the Paper of the Year Award from the Association of Private Enterprise, Best Article Award from the Society for the Development of Austrian Economics, and Second Prize from the Independent Institute Garvey Essay Contest. Stringham serves on the Executive Committee of the Society for the Development of Austrian Economics and on the Executive Committee of the Association of Private Enterprise Education.