Does Drinking Really Decrease in Bad Times?

Abstract

This paper investigates the relationship between macroeconomic conditions, alcohol use, and drinking problems using individual-level data from the 1987-1999 years of the Behavioral Risk Factor Surveillance System. 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 among existing drinkers, rather than movements into or out of drinking. Moreover, the decrease in alcohol use occurring during bad economic times is concentrated among heavy consumers, with light drinking actually increasing in these periods. We find no evidence that the decline in overall drinking masks a rise in alcohol use for persons becoming unemployed during contractions, suggesting that any stress-induced increases in consumption are more than offset by reductions resulting from changes in economic factors such as lower incomes.