Economic conditions and alcohol problems

This study investigates the relationship between macroeconomic conditions and two alcohol-related outcomes - liquor consumption and highway vehicle fatalities. Fixed-effect models are estimated for the 48 contiguous states over the 1975-1988 time period. Alcohol consumption and traffic deaths vary procyclically, with a major portion of the effect of economic downturns attributed to reductions in incomes, rather than employment. The intake of hard liquor is the most sensitive to the state of the macroeconomy. There is no evidence, however, that fluctuations in economic conditions have a disproportionate impact on the drunk-driving of young adults.