A Dry New Deal

I came across a study recently in which the compiled data was illustrated as a world map — with different countries being one color or another based on the average percentage of a citizen’s income they spent on alcohol.

In the United States, we’re at just about 1%, which doesn’t seem so bad if you’re comparing us to Ireland (7% — we may need to schedule an intervention there). But that 1% — 600 dollars, if you’re working from census data and the understanding that the “average” American earns 60,000 per annum — could add up.

Now, I’m not proposing another amendment to the constitution here (or would it be an amendment to the amendment that ended the initial amendment?) — we’re free to do with our money as we choose, ingesting our particular poisons. Other people drink. Some use recreational drugs. Some abuse prescription drugs recreationally. Some gamble, smoke cigarettes, and some waste their time and effort watching reality television. We all have our vices — without them, we’d go insane.

By The Numbers

Let’s break things down. The generally accepted percentage of adults 21 and over who drink at least once a year is a bit over 50%. I’m sure some of those are weddings-and-parties drinkers, but the fact that 47% of those people self-reported as binge drinkers, and 12% of them identified as heavy drinkers — well, I think we can just leave it there. If you think I’m getting more granular than that regarding who these people are and how much they’re drinking, you’re sorely mistaken, as this is not a statistics blog — a subject I enjoyed so much in university I took it three times.

So, that’s half of the people in the country that drink, spending $600 a year on that drinking — and with 73% of the population being over the legal drinking age (230 million, give or take a few million) and half of those people actively drinking, we’ve got 115,120,495 or so people participating in the annual $600 tax-on-karaoke-singing.

That’s just a bit more than $69 billion. Spent on alcohol. Without arguing its failures and merits as a substance or institution, surely there are better things the drinkers of America could invest in, no?

Take the cost of college, for instance — federal student loan recipients now exceed 42 million. Those 42 million people are repaying an average of $3,360 per year — for a total of around $140 billion. How many stressed out, economically frustrated post-grads would welcome an across-the-board 50% reduction in those loans?

There are arguments against taking loans in the first place — after all, you don’t need a degree to succeed (though your parents and every teacher you’ve ever met will attempt to convince you that you’re worthless without at least a bachelor’s, leading to our current plague of very well-read baristas). So let’s look at something everyone’s more familiar with: income tax.

A Modest Proposal

With the government bringing in $3.3 trillion a year, $1.6 trillion (about 48%), comes out of your paycheck. This seems like applying our let’s-reinvest-our-booze-money-scheme wouldn’t have much of an impact — but think about the things you could buy as a result of our misinformed pipe dream. Your income tax would go down 4.3%.

Taking our average American, making $60,000 annually, and living in Florida (because state income tax is for suckers), our sample citizen is paying a bit more than $11,000 in income tax annually. Remember when everyone got excited in the 00s because the federal government was handing out those “oh you’ll pay for this later, suckers” checks? This would be a $500 Christmas bonus, courtesy of Uncle Sam, every year, for every working American, forever.

That’s a car repair, a good portion of one’s rent, a new set of golf clubs (maybe? new balls, for sure), a Playstation 4. It’s enough money to buy something nice, but not so much that people are likely to save it or invest it — that money’s going to go right into small, local retail and service businesses. And those people are spending the money they’re making from you, reinvesting in other goods and services at the local level.

The government, of course, is waiting in the wings to fund social services and infrastructure by assessing sales tax all over our new low-rent utopian economy. Would the economy suffer because alcohol sales ceased? Possibly. Do the sort of people who frequently spend money on alcohol tend to say, “forget the keg this weekend my bros, I’ve got a lead on a new biotech IPO we need to dig into?” Or would they just buy other stuff?

Of course, we’re not going to convince our newly-sober friends that they’re supposed to keep paying for the alcohol they’re no longer drinking in the name of social progress. We want them to invest in the country and their communities, but there has to be an upside to their newfound lack-of-cha-cha-sliding at weddings.

Could this work? Probably not. But it’s fun to think about.

We’ve had savings bonds, we’ve had war bonds. Maybe we could try sobriety bonds? Maybe we could provide a tax incentive reducing insurance copays and deductibles to people making the conscious, healthy choice to abstain from alcohol? Perhaps all of the tangential costs related to that drinking — in the criminal justice system, the medical system, the Kardashian-industrial-complex — could offset our new sober friends’ economic responsibility — and reduce costs across the board for everyone else as well.

There are a lot of problems with the numbers here, I know that. There are a lot of assumptions about human nature that simply don’t make a lot of sense — it would take a lot of work to convince those who drink to give it up, and even more work to convince them to do it for wealth-redistribution purposes. Not to mention, how would one confirm their abstinence at all? The honor system never seems to work all that well when money’s involved.

I’m just a guy, ostensibly well-educated in economics, spit-balling a world in which we’d choose to spend our beer money on something that doesn’t — literally — end up in the sewer. Maybe we can’t convince everyone who drinks of the merits and economic advantages of abstinence, but I don’t think as a marketing strategy “you can buy cool stuff with that extra money” has too many holes in it.

And I really want that Playstation, Madden’s looking good this year.


  1. DesertDog13

    Very impressive economic analisis!!!!

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