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Item Restricted Alcohol consumption and its effects on productivity(2005-10-20) Villanueva, Leon T.; Bacani, Ramon MiguelThis study is an attempt to investigate the productivity effects of alcohol. The paper uses a methodology based on a study by Mullahy and Sindelar (1991), where individual productivity is assumed to be dependent to health human capital, non-health human capital (e.g. education) and individual covariates (e.g. age). Along with investigating the general effects of alcohol consumption to' productivity, this paper also explores the productivity effects in a regional setting. Trends in the relationship are also observed, specifically testing the existence of the u-shaped relationship [Cook and Moore (2000)] between the alcohol consumption to productivity in the Philippine setting. The results have been somewhat counter-intuitive. For the primary data set, alcohol consumption seems to be affecting productivity in a positive manner, suggesting that drinking increases productivity. This gives rise to the argument of the u-shaped relationship of alcohol and productivity, with the former serving as a stress reliever and as a "social lubricant" if consumed in moderate amounts [Tekin (2004)). In the per region results, alcohol is found significant only in two areas (Region 12 and 14), with one having a positive coefficient and one, negative. A possible explanation for such result can be attributed to these regions' cultural heritage. Also, for further analysis, the data set of heavy drinkers was separated from the set of casual drinkers. Results show that heavy drinkers run a significantly higher risk of losing productivity as compared to the casual drinkers, which are more likely to benefit from alcohol consumption, though to an insignificant degree. This confirms, to a certain level, the existence of a u-shaped relationship between alcohol consumption to productivity in the Philippine setting. However, due to the nature of the data set, the paper can only discuss the direct effects to productivity of alcohol consumption. It does not tackle the myriad indirect consequences and costs related with consumption [Eberwine (2005); Culyer and Newhouse (2000)]. It is recommended that future studies attempt to incorporate these indirect effects in order to fully encapsulate the costs of alcohol consumption.