First Faculty Advisor
Dr. Allison Kaminaga
Second Faculty Advisor
Dr. Laura Beaudin
alcohol industry; millennials; alcohol consumption; spending
This paper explores the relationship age cohorts, or generations, have had with regards to alcohol expenditure over time. Articles from popular publications such as Business Insider claim Millennials are “killing” the alcohol industry due to their lack of consumption (Taylor, 2017), but provide little empirical analysis of any academic rigor to make such claims. These claims do matter, as they have implications for the alcohol industry itself as well as investors, law enforcement, the healthcare industry, and policy makers. This paper uses four cross-sectional decadal datasets spanning from 1986 to 2016 from the United States Bureau of Labor Statistics Consumer Expenditure Survey to determine the validity of these claims, while controlling for factors such as income, marital status, race, sex, healthcare expenditure, family size, and others. The question being explored is, “Ceteris paribus, does the Millennial generational expenditure on alcohol differ from previous generations?” Left-censored Tobit I models indicate that Millennials spend more on alcohol than previous generations, as households headed by people in their 20’s spent more on alcohol in 2016 Quarter 1 than in any of the other three years’ first quarters when adjusted for inflation and controlling for demographics, income, and non-alcoholic expenditures, contradicting the claims of these articles. Following the regression analysis is a discussion of the results and their implications for the aforementioned parties.