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The Effect of Heavy Drinking on Social Security Old‐Age and Survivors Insurance Contributions and Benefits
Author(s) -
OSTERMANN JAN,
SLOAN FRANK A.
Publication year - 2004
Publication title -
the milbank quarterly
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.563
H-Index - 101
eISSN - 1468-0009
pISSN - 0887-378X
DOI - 10.1111/j.0887-378x.2004.00320.x
Subject(s) - social security , business , actuarial science , demographic economics , environmental health , socioeconomics , political science , economics , medicine , law
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.