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The Effects of Merit-Based Financial Aid on Drinking in College

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  • Benjamin W. Cowan
  • Dustin R. White

Abstract

We study the effect of state-level merit aid programs (such as Georgia's HOPE scholarship) on alcohol consumption among college students. Such programs have the potential to affect drinking by (1) raising students' disposable income and (2) increasing the incentive to maintain a minimum GPA in college (in order to retain the scholarship). Using two independent datasets, we find that the presence of a merit aid program in one's state leads to an overall increase in drinking among men but not among women. This increase is concentrated among individuals who are above the minimum GPA threshold necessary for the scholarship; individuals who are below the threshold GPA experience no increase in their alcohol use. Our identification strategy is supported by the finding that no change in drinking is observed for non-students in states that adopt merit-aid programs.

Suggested Citation

  • Benjamin W. Cowan & Dustin R. White, 2014. "The Effects of Merit-Based Financial Aid on Drinking in College," Carlo Alberto Notebooks 346, Collegio Carlo Alberto.
    • Handle: RePEc:cca:wpaper:346
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    3. Dustin R. White & Benjamin W. Cowan & Jadrian J. Wooten, 2019. "March Madness: Ncaa Tournament Participation And College Alcohol Use," Contemporary Economic Policy, Western Economic Association International, vol. 37(3), pages 449-461, July.
    4. Katare, Bhagyashree, 2021. "Do low-cost economic incentives motivate healthy behavior?," Economics & Human Biology, Elsevier, vol. 41(C).
    5. Braga, Breno & Malkova, Olga, 2020. "Hope for the Family: The Effects of College Costs on Maternal Labor Supply," IZA Discussion Papers 12958, Institute of Labor Economics (IZA).
    6. Elena Andreyeva & Benjamin Ukert, 2018. "The impact of the minimum wage on health," International Journal of Health Economics and Management, Springer, vol. 18(4), pages 337-375, December.

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    JEL classification:

    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions

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