Gender differences in drinking behavior during an economic collapse: evidence from Iceland

In this study we exploit the 2008 Icelandic economic collapse to explore the effect of a macroeconomic downturn on drinking behavior across gender and types of drinkers. Using comprehensive panel data, we furthermore shed light on the role of real income and working hours as mechanisms that may explain changes in drinking patterns pre to post the collapse. The unique panel data is from 2007 to 2009, incidentally before and after the crisis hit, and was collected as a postal survey by The Directorate of Health. We specifically explore four outcomes: Frequency of any alcohol consumption, frequency of binge drinking, binge drinking participation and alcohol dependence, using pooled OLS and linear probability models. We find that women tend to decrease their frequency of any alcohol consumption and frequency of binge drinking more than men between waves but men show a stronger negative response to the crisis in binge drinking participation and alcohol dependence. Changes in individual income explain most of men’s reduction in drinking, but women’s drinking responses are not operating through labor-market mechanisms to the same extent. Other factors in the demand function for alcohol that changed during the crisis seem to play a greater role, most notably the real price of alcohol, which increased considerably following the economic collapse.