Alcohol Consumption Pro-Cyclical?

Thanks mainly to indirect encouragement from commenter Teme, I am continuing to plough the Finland furrow. Today I found this very interesting piece of research:


This paper explores the connection between alcohol mortality, drinking behaviour and macroeconomic fluctuations in Finland by using both aggregate and micro-level data during the past few decades. The results from the aggregate data reveal that an improvement in regional economic conditions measured by the employment-to-population rate produces a decrease in alcohol mortality. However, the great slump of the early 1990s is an exception to this pattern. During that particular episode, alcohol mortality did indeed decline, as there was an unprecedented collapse in economic activity.
The results from the micro-data show that an increase in the employment-to-population rate and expansion in regional GDP produces an increase in alcohol consumption while having no effect on the probability of being a drinker. All in all, the Finnish evidence presented does not overwhelmingly support the conclusions reported for the USA, according to which temporary economic slowdowns are good for health. In contrast, at least alcohol mortality seems to increase in those bad times that are not exceptional economic crises like the one experienced in the early 1990s. However, there is evidence that alcohol consumption is strongly procyclical by its nature. This suggests that alcohol consumption and mortality may be delinked in the short-run business cycle context.

KEY WORDS: alcohol mortality, drinking, business cycles

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About Edward Hugh

Edward 'the bonobo is a Catalan economist of British extraction. After being born, brought-up and educated in the United Kingdom, Edward subsequently settled in Barcelona where he has now lived for over 15 years. As a consequence Edward considers himself to be "Catalan by adoption". He has also to some extent been "adopted by Catalonia", since throughout the current economic crisis he has been a constant voice on TV, radio and in the press arguing in favor of the need for some kind of internal devaluation if Spain wants to stay inside the Euro. By inclination he is a macro economist, but his obsession with trying to understand the economic impact of demographic changes has often taken him far from home, off and away from the more tranquil and placid pastures of the dismal science, into the bracken and thicket of demography, anthropology, biology, sociology and systems theory. All of which has lead him to ask himself whether Thomas Wolfe was not in fact right when he asserted that the fact of the matter is "you can never go home again".

1 thought on “Alcohol Consumption Pro-Cyclical?

  1. For alcoholism to develop to the point of threat to life takes years, even decades, so I would be suprised if there were a correlation to business cycles… There is a tradition of looking at correlations between total consumption of alcohol and associated harms in Finnish alcohol studies, which is partly political: researches advocate policy of keeping alcohol price high and supply limited. I’m not getting into whether it is a good policy or not here, I have my doubts, but I am fairly certain that it is not that useful framework for looking at the causes of alcoholism. There are the generally miserable: uneducated, poor, unemployed and drunk. Than there are middle-class alcoholics, for example a sales person whose client entertainment gets out of hand. There are mentally ill doing “self medication”. There are teenagers, with typical teenager problems and drinking on top of that. And so on. I am extremely sceptical of macro level studies coming up with useful explanations for such a heteregenous phenomena.

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