Does Drinking in Moderation Lead to Higher Life Satisfaction?

This paper presents a study of the impact on a person’s life satisfaction of moderate alcohol consumption. Using a large dataset (N = 1.5 million) which covers the period 2005–2010, I find that moderate drinkers tend to be more satisfied with their life than abstainers. In order to check the robustness of the result found using the linear regression model, an instrumental variables (IV) approach is adopted. I exploit the fact that those who were interviewed after a holiday were more likely to report that they had consumed alcohol. The IV approach suggests that moderate alcohol consumption has little causal effect on life satisfaction. The positive correlation between moderate drinking and life satisfaction seems to be largely due to selection—that is, happy individuals tend to drink in moderation, rather than vice versa.