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

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Listed author(s):
  • Benjamin W. Cowan
  • Dustin R. White
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    Abstract

    We study the e ect 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.

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    File URL: http://www.carloalberto.org/assets/working-papers/no.346.pdf
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    Paper provided by Collegio Carlo Alberto in its series Carlo Alberto Notebooks with number 346.

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    Length: 30 pages
    Date of creation: 2014
    Handle: RePEc:cca:wpaper:346
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    Find related papers by 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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    1. Jenny Williams & Lisa Powell & Henry Wechsler, 2003. "Does alcohol consumption reduce human capital accumulation? Evidence from the College Alcohol Study," Applied Economics, Taylor & Francis Journals, vol. 35(10), pages 1227-1239.
    2. Liam Delaney & Colm Harmon & Patrick Wall, 2008. "Behavioral Economics And Drinking Behavior: Preliminary Results From An Irish College Study," Economic Inquiry, Western Economic Association International, vol. 46(1), pages 29-36, 01.
    3. David L. Sjoquist & John V. Winters, 2015. "State Merit Aid Programs and College Major: A Focus on STEM," Journal of Labor Economics, University of Chicago Press, vol. 33(4), pages 973-1006.
    4. David L. Sjoquist & John V. Winters, 2015. "State Merit-Based Financial Aid Programs And College Attainment," Journal of Regional Science, Wiley Blackwell, vol. 55(3), pages 364-390, 06.
    5. Carrell, Scott E. & Hoekstra, Mark & West, James E., 2011. "Does drinking impair college performance? Evidence from a regression discontinuity approach," Journal of Public Economics, Elsevier, vol. 95(1), pages 54-62.
    6. Ruhm, Christopher J. & Black, William E., 2002. "Does drinking really decrease in bad times?," Journal of Health Economics, Elsevier, vol. 21(4), pages 659-678, July.
    7. Sara Markowitz & John Tauras, 2009. "Substance use among adolescent students with consideration of budget constraints," Review of Economics of the Household, Springer, vol. 7(4), pages 423-446, December.
    8. Carpenter Christopher S & Kloska Deborah D & O'Malley Patrick & Johnston Lloyd, 2007. "Alcohol Control Policies and Youth Alcohol Consumption: Evidence from 28 Years of Monitoring the Future," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 7(1), pages 1-23, May.
    9. Scott Adams & McKinley L. Blackburn & Chad D. Cotti, 2012. "Minimum Wages and Alcohol-Related Traffic Fatalities among Teens," The Review of Economics and Statistics, MIT Press, vol. 94(3), pages 828-840, August.
    10. Michael Kremer & Dan Levy, 2008. "Peer Effects and Alcohol Use among College Students," Journal of Economic Perspectives, American Economic Association, vol. 22(3), pages 189-206, Summer.
    11. Christopher Cornwell & David B. Mustard, 2007. "Merit-Based College Scholarships and Car Sales," Education Finance and Policy, MIT Press, vol. 2(2), pages 133-151, February.
    12. Christopher M. Cornwell & Kyung Hee Lee & David B. Mustard, 2005. "Student Responses to Merit Retention Rules," HEW 0501001, EconWPA.
    13. Christopher Cornwell & David B. Mustard & Deepa J. Sridhar, 2006. "The Enrollment Effects of Merit-Based Financial Aid: Evidence from Georgia's HOPE Program," Journal of Labor Economics, University of Chicago Press, vol. 24(4), pages 761-786, October.
    14. Thomas S. Dee & Linda A. Jackson, 1999. "Who Loses HOPE? Attrition from Georgia’s College Scholarship Program," Southern Economic Journal, Southern Economic Association, vol. 66(2), pages 379-390, October.
    15. Christopher M. Cornwell & Kyung Hee Lee & David B. Mustard, 2005. "Student Responses to Merit Scholarship Retention Rules," Journal of Human Resources, University of Wisconsin Press, vol. 40(4), pages 895-917.
    16. Bridget Terry Long, 2004. "How do Financial Aid Policies Affect Colleges?: The Institutional Impact of the Georgia HOPE Scholarship," Journal of Human Resources, University of Wisconsin Press, vol. 39(4).
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