The Effect of Heavy Drinking on Social Security Old-Age and Survivors Insurance Contributions and Benefits

September 2004 | Jan Ostermann, Frank A. Sloan

This article estimates the effects of heavy alcohol consumption on Social Security Old-Age and Survivor Insurance (OASI) contributions and benefits. The analysis accounts for differential earnings and mortality experiences of individuals with different alcohol consumption patterns and controls for other characteristics, including smoking. Relative to moderate drinkers, heavy drinkers receive fewer OASI benefits relative to their contributions. Ironically, for each cohort of 25-year-olds, eliminating heavy drinking costs the program an additional $3 billion over the cohort’s lifetime. Public health campaigns are designed to improve individual health-relevant behaviors and, in the long run, increase longevity. Therefore, if programs for the elderly are structured as longevity-independent defined benefit programs, their success will reward healthier behaviors but increase these programs’ outlays and worsen their financial condition.

Author(s): Jan Ostermann; Frank A. Sloan

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Volume 82, Issue 3 (pages 507–546)
DOI: 10.1111/j.0887-378X.2004.00320.x
Published in 2004