Tag Archives: alcohol

The Drinkers’ Bonus: Alcohol Intake and Increased Earnings

Drink­ing alco­hol – and the increased social cap­it­al that it leads to – may not just be respons­ible for a pos­sible increase in life span; it may increase your earn­ings, too.

In an ana­lys­is of both the Gen­er­al Social Sur­vey and the pub­lished lit­er­at­ure, research­ers for the Reas­on Found­a­tion show that alco­hol drink­ers earn, on aver­age, 10% more than abstain­ers (pdf). This is known as the drink­ers’ bonus.

Recent stud­ies indic­ate that drink­ing and indi­vidu­al earn­ings are pos­it­ively cor­rel­ated. Instead of earn­ing less money than non­drink­ers, drink­ers earn more. One explan­a­tion is that drink­ing improves phys­ic­al health, which in turn affects earn­ings (Hamilton and Hamilton, 1997). We con­tend that there is an eco­nom­ic explan­a­tion. […]

Drink­ers typ­ic­ally tend to be more social than abstain­ers. As Cook (1991) explained, drink­ing is a social activ­ity, and one reas­on people drink is to be soci­able. In the med­ic­al lit­er­at­ure, Skog (1980) showed that mod­er­ate drink­ers have the strongest social networks. Fur­ther­more, Lei­f­man et al. (1995) doc­u­mented a neg­at­ive rela­tion­ship between social integ­ra­tion and abstin­ence. Wheth­er abstain­ers choose not to be as social or wheth­er organ­izers of social occa­sions involving drink­ing exclude abstain­ers is unclear. Abstain­ers may prefer to inter­act with oth­er abstain­ers or less social people. Altern­ately, abstain­ers might not be invited to social gath­er­ings, work-related or otherwise, because drink­ers con­sider abstain­ers dull.

Corcor­an et al. (1980), Mont­gomery (1991), and Put­nam (2000) each made con­vin­cing cases that social net­works are import­ant for find­ing jobs and earn­ing pro­mo­tions. Mont­gomery (1991) explained that com­pan­ies prefer acquaint­ances of employ­ees because employ­ees screen poten­tial can­did­ates and thereby reduce the cost of search. Approx­im­ately half the work­ers sur­veyed in the Pan­el Study of Income Dynam­ics found their job through friends or rel­at­ives, and one-third repor­ted help from acquaint­ances in obtain­ing their job (Corcor­an et al., 1980). There­fore, a per­son with more con­tacts will have more labor mar­ket options (Burt, 1997). Gran­ovet­ter (1995) sug­ges­ted that a large quant­ity of weak ties or friends-of-friends may be most import­ant to gar­ner­ing the best job offers.

Thus, if social drink­ing enables great­er social net­works, it will also increase earn­ings. In terms of search the­ory: the more one drinks, the more people one knows, and the more people one knows, the lower the mar­gin­al costs of search.

The study is packed full of excel­lent ref­er­ences to pub­lished stud­ies (as you can tell from the above excerpt), so I sug­gest read­ing the access­ible (and very short!) report. It’s also worth not­ing foot­notes four and five, describ­ing how this is just like all invest­ments in cap­it­al, in that an optim­al level exists: “you must drink more than 21 drinks per week to earn as little as a non-drink­er”.

via @phila_lawyer

Drinking Levels and Mortality Rates

Des­pite the vari­ous and severe health risks that come with drink­ing, abstain­ing from alco­hol appears to increase your risk of dying pre­ma­turely. The reas­ons for this are not clearly known, but it is thought to be because drink­ers are more likely to belong to a com­munity (albeit one that drinks), and a feel­ing of com­munity is strongly cor­rel­ated with hap­pi­ness and longev­ity.

Even after con­trolling for nearly all ima­gin­able vari­ables — socioeco­nom­ic status, level of phys­ic­al activ­ity, num­ber of close friends, qual­ity of social sup­port and so on — the research­ers […] found that over a 20-year peri­od, mor­tal­ity rates were highest for those who were not cur­rent drink­ers, regard­less of wheth­er they used to be alco­hol­ics, second highest for heavy drink­ers and low­est for mod­er­ate drinkers. […]

These are remark­able stat­ist­ics. Even though heavy drink­ing is asso­ci­ated with high­er risk for cir­rhosis and sev­er­al types of can­cer (par­tic­u­larly can­cers in the mouth and eso­phag­us), heavy drink­ers are less likely to die than people who don’t drink, even if they nev­er had a prob­lem with alco­hol. One import­ant reas­on is that alco­hol lub­ric­ates so many social inter­ac­tions, and social inter­ac­tions are vital for main­tain­ing men­tal and phys­ic­al health. […]

The authors of the new paper are care­ful to note that even if drink­ing is asso­ci­ated with longer life, it can be dan­ger­ous: it can impair your memory severely and it can lead to non­leth­al falls and oth­er mis­haps […] that can screw up your life. There’s also the depend­ency issue.

The cor­rel­a­tions between alco­hol intake and vari­ous health out­comes (both pos­it­ive and neg­at­ive) is con­fus­ing and var­ied. A few things seem to be for sure: it can be good and it can be bad; no caus­a­tion has been proven; and the effects dif­fer between the sexes.

Update: I for­got to link to the pub­lished study (Hola­han et al., 2010)… the Res­ults sec­tion is the one worth per­us­ing. For those without full access to the study (ahem), Over­com­ing Bias provides the full list of con­trols.

Update: Jonah Lehr­er dis­cusses this study in an art­icle titled Why Alco­hol Is Good for You, emphas­ising the social side of drink­ing as the key to longev­ity.

Narratives for Selling Premium Goods: The Grey Goose Story

People want to pay more in order to own lux­ury goods, but you need to give them a reas­on to do so. That excuse? A com­pel­ling story.

One man that sub­scribed to this idea was Sydney Frank, as is evid­ent from the strategy he developed for Grey Goose: the ‘super­premi­um’ vodka that Bar­cardi bought for $2 bil­lion in cash in what became the largest ever single brand sale.

In a 2005 New York art­icle pub­lished shortly before his death, you can read all about Sydney Frank’s marketing/branding strategy and the com­pel­ing story of Grey Goose vodka. This excerpt fol­lows Frank’s decision to have Grey Goose dis­tilled in France:

But why France? Does­n’t vodka come from Rus­sia, or per­haps, in a pinch, Scand­inavia? “People are always look­ing for some­thing new,” says Frank. It’s all about brand dif­fer­en­ti­ation. If you’re going to charge twice as much for a vodka, you need to give people a reas­on.

“Niet­z­sche explains that human beings are look­ing for the ‘why’ in their lives, […] we refer to this ‘why’ as ‘the Great Story.’ The Great Story must be enti­cing, mem­or­able, eas­ily repeat­able, and about what you want your brand to be about.”

For Grey Goose, the brand was about unrivaled qual­ity. Grey Goose’s Great Story hinged on the fol­low­ing key points: It comes from France, where all the best lux­ury products come from. It’s not anoth­er rough-hewn Rus­si­an vodka—it’s a mas­ter­piece craf­ted by French vodka artis­ans.

It uses water from pristine French springs, filtered through Cham­pagne lime­stone.

It’s got a dis­tinct­ive, care­fully designed bottle, with smoked glass and a sil­hou­ette of fly­ing geese. It looks fant­ast­ic up behind the bar, the way it catches the light […] It sure looks expens­ive.

It was shipped in wood crates, like a fine wine, not in card­board boxes like Joe Schmo’s vodka. This catches the bar­tender­’s eye and rein­forces the aura of qual­ity. Nev­er for­get the influ­ence of the bar­tender. […]

And now the most import­ant piece of the story—the twist that brings it all togeth­er: Grey Goose costs way more than oth­er vod­kas. Waaaaaaay more. So it must be the best.

This descrip­tion of Grey Goose’s Great Story per­fectly cap­tures the essence of the art­icle.

Health and Alcohol Intake (Men, Women, Wine)

A lon­git­ud­in­al study of almost 20,000 U.S. women is show­ing signs that mod­er­ate alco­hol con­sump­tion (“one or two alco­hol bever­ages a day”) can lower the risk for obesity and inhib­it weight gain:

Over the course of the study, 41 per­cent of the women became over­weight or obese. Although alco­hol is packed with cal­or­ies (about 150 in a six-ounce glass of wine), the non­drink­ers in the study actu­ally gained more weight over time: nine pounds, on aver­age, com­pared with an aver­age gain of about three pounds among reg­u­lar mod­er­ate drink­ers. The risk of becom­ing over­weight was almost 30 per­cent lower for women who con­sumed one or two alco­hol bever­ages a day, com­pared with non­drink­ers. […]

The link between con­sump­tion of red wine and less weight gain was par­tic­u­larly pro­nounced. […] Some stud­ies have sug­ges­ted that res­veratrol, a com­pound present in grapes and red wine, appears to inhib­it the devel­op­ment of fat cells and to have oth­er anti­obesity prop­er­ties.

The art­icle also notes that while mod­er­ate alco­hol con­sump­tion has been asso­ci­ated with “bet­ter heart health”, it has also been asso­ci­ated with an increase in breast can­cer risk.

None of this is good news for men:

Stud­ies sug­gest that drink­ing alco­hol has dif­fer­ent effects on eat­ing habits among men and women. Men typ­ic­ally add alco­hol to their daily cal­or­ic intake, where­as women are more likely to sub­sti­tute alco­hol for food. […]

In addi­tion, there may be dif­fer­ences in how men and women meta­bol­ize alco­hol. Meta­bol­ic stud­ies show that after men drink alco­hol, they exper­i­ence little if any meta­bol­ic change. But alco­hol appears to slightly speed up a woman’s meta­bol­ism.

As before: this is still cor­rel­at­ory, but inter­est­ing non­ethe­less.

Scarcity Marketing

Neur­omar­ket­ing has recently been look­ing at The Scarcity Effect:

WORCHEL, LEE, AND ADEWOLE (1975) asked people to rate chocol­ate chip cook­ies. They put 10 cook­ies in one jar and two of the same cook­ies in anoth­er jar. The cook­ies from the two-cook­ie jar received high­er ratings—even though the cook­ies were exactly the same! Not only that, but if there were a lot of cook­ies in the jar, and then a short time later most of the cook­ies were gone, the cook­ies that were left received an even high­er rat­ing than cook­ies that were in a jar where the num­ber of cook­ies didn’t change.

In a fol­low-up post they look at the case of Knob Creek whis­key using scarcity in their latest mar­ket­ing cam­paign (after they announced that there’s a chance they “might run out of their sig­na­ture bour­bon”):

If sup­ply is indeed short, why not cut back on advert­ising, save a few bucks, and still sell 100% of your invent­ory?

The answer is brand­ing. Should Knob Creek be known simply as a premi­um bour­bon, or the bour­bon that was so good it became unavail­able? Should the stand­ards used in the cre­ation of Knob Creek be high, or so high that its makers wouldn’t com­prom­ise their man­u­fac­tur­ing and aging pro­cess to make more avail­able?