“The Drinkers Premium” — Alcohol’s Best Kept Secret

Have you had a drink or two within the last 24 hours? Oddly enough, if you have an income that tops $75,000, you more than likely answered yes. It’s dubbed “The Drinkers Premium”.

“The Drinkers Premium” declares drinkers earn, on average, 10–17% more money than alcohol abstainers, or non-drinkers…but…wait…huh?

Since the formalization of education itself, anti-alcohol programs from elementary all the way through senior year of high school have hammered into the heads of most humans the inevitable dangers, risks, and consequences of drinking alcohol long-term.

Over-consumption is seen as the main concern because it can lead to dependence and addiction. This was a fear that most of the public understood then, or most definitely understand now. So, if we’ve been taught that alcohol is dangerous how could it lead to a higher income?

Will that next gin and tonic really increase the Average Joe’s median income?

Social Capital

“I only drink to increase my income”. Can you imagine the statement above being seen as rational and reasonable?

Well, scientists have been trying to prove just that for longer than you might think.

Thorough studies from renowned scientists such as Corcoran (1980), Montgomery (1991), and Putnam (2000) each made convincing cases that well-woven social networks are essential, important, and advantageous when finding jobs, increasing social capital, and earning financial raises.

Also, medical literature from Skog (1980) showed that moderate drinkers consistently have the strongest social networks when compared against other groups such as abstainers. Furthermore, Leifman et al. (1995) documented a negative relationship between social integration and abstinence. Hmm. Very interesting.

While this might be obvious, the study also concluded that drinkers are almost always more social than abstainers. They have collected a network through social drinking, and this has led to more opportunity.

People have enjoyed social drinking for millennia and the power of having a conversation over a drink rather than a meeting table is powerful. The relaxed environment and comfortable setting can allow the “true” person to come out and become more vulnerable. This allows for stronger social connections and an increase in social capital in general.

So, drinkers make more money? After we began researching this taboo-esque logic, we began to wonder what could really be the cause of such a large hike in median income?

Is there truly a cause, or is it just a form of correlation?

Higher social capital = higher earnings.

“No Booze? You May Lose: Why Drinkers Earn More Money Than Nondrinkers” is a published study conducted by Bethany L. Peters, Ph.D. and Edward P. Stringham, Ph.D. that hypothesizes drinking directly enhances social capital leading to superior market outcomes.

“Instead of earning less money than nondrinkers, drinkers earn more,” Bethany Peters and Edward Stringham, wrote. More specifically, the study found that workers who drank in a social setting earned more than those who tipped a glass at home.”

Again, the logic goes back to the fact that since drinkers have larger social networks their social capital increases, sometimes exponentially. The study found that drinkers earned 10–17% more than alcohol abstainers. Using data, this shows that drinking and earnings are positively correlated.

How do you differentiate between social, moderate, or nonsocial drinking? The same scientists compared the earnings of those who frequent bars, at least twice per month, and those who do not.

The studies found that males those who frequent bars at least twice per month earn an additional 7% on top of the 10% drinker’s premium. These results again determine that social drinking leads to even more increased social capital.

Economist Jan van Ours, of Tilburg University, conducted a similar study published by the Centre for Economic Policy Research. Conducted on 650 Dutchmen, aged 26 to 55, in the Netherlands who drink alcohol in moderation. His study concluded that the dutch males also earned on average 10% more than their abstaining counterparts. More proof of the concept.

The Dutch have always enjoyed drinking

Based on the notion of “Social Capital,” his study contends that those who drink socially have an easier time getting jobs, have more contacts, and make longer-lasting bonds. All of these things, along with charisma and other characteristics can ultimately affect your salary.

Also, while obvious, moderation is an essential element to alcohol-related theories similar to “The Drinkers Premium”. Most rational humans have agreed that daily alcohol consumption at an intense and high rate can, and most likely will, lead to serious health, legal, and social troubles. This is the double-edged sword.

Drink moderately, safely, responsibly, but never forget to have fun as well. That’s what social drinking, and social capital, is all about, collective growth, cheers, and ultimately good health.

Here, I’ll throw you a cocktail recipe to get your money-making ignited.

Cheers,

J. Robert Fallon III