Government support and alcohol consumption

Denmark is usually known as a country with one of the highest levels of alcohol-consumption by teenagers and student. According to the following article from the ft, this might all be due to the high level of governmental allowances:

As a new crop of freshers departs for university, will they be spending more time in the library or the student union bar? History suggests the bar, but something has been changing in the world of lectures and mortar boards. For two decades the cost of a university education has grown ever less subsidised, and there are reasons to think that this trend will make the library look more attractive.

A recent study led by Nick Foskett, professor of education at the University of Southampton, looked at the experience of fee-paying students in Australia and New Zealand, as well as asking British students about their plans and expectations. Among a number of broader conclusions, they expect an outbreak of sobriety in the student body.

This is partly for social reasons. As students pay higher fees, they become more likely to have some kind of job and more likely to be living at home. Neither trend is conducive to heavy boozing.

But there is another, more direct, channel of causation. Booze costs money, even at the Leeds student union bar. Students with less disposable income may, rather than mugging old ladies or turning to prostitution, simply drink less.

Two economists have tried to be a bit more precise about this sort of thing. Sara Markowitz and John Tauras, both based in the US, recently released a paper titled “Even for teenagers, money does not grow on trees.” Examining the spending patterns of 9,000 US teenagers, they found evidence of both direct and indirect effects.

An example of the indirect effect comes from the price of petrol. When it is more expensive, teenagers drink less but smoke more. This suggests that drinking and driving go hand-in-hand - possibly because kids need to drive to a friendly bar - but that they can smoke anywhere and if immobilised by high transport costs, they probably will.

The direct effects are always mixed in with the indirect. Richer teenagers spend more money on everything, including booze, fags and weed. Yet this is not purely an effect of extra spending power. The source of the money counts too. A teenager who earns an extra $1,000 through a job is 1.1 per cent more likely to smoke and 1.6 per cent more likely to drink and 0.6 per cent more likely to use marijuana. But when the same sum comes from pocket money, the effects are more than five times greater: a teenager with an extra $1,000 annual allowance is 6.2 per cent more likely to smoke, 9.6 per cent more like to drink and 4.5 per cent more likely to use marijuana.

It is not clear whether this difference is because part-time workers have less time to indulge, whether they come from different backgrounds (some effort is made in the research to allow for this) or whether there is a difference in character between the workers and the pocket-money scroungers. Still, the conclusion is clear enough: cut off pocket money for teenagers and lower the minimum wage at once. It’s the only way to keep our teenagers living clean lives.

Perhaps things shouldn’t be allowed to rest there. After all, these results are not totally convincing. For example, Markowitz and Tauras cannot find any evidence that when the price of beer falls, teenagers drink more beer. That has to raise questions as to how much weight we can put on any of this.

It is too early to say, then, whether higher tuition fees really will empty out the student union bars. Is cheap beer really no more popular than expensive beer? Clearly some intensive field research is now required.