Alcohol Consumption Decisions in Korea
Deanna L. Sharpe
University of Missouri
Mohamed Abdel-Ghany
University of Alabama
Hye-Yeon Kim
Cheju National University
Gong-Soog Hong
Utah State University
ABSTRACT: Data from the 1996 Korean Household Panel Study and a double-hurdle
model were used to analyze alcohol consumption decisions in Korea. The Korean most
likely to consume alcoholic beverages is a young male, and a college graduate. Among
those who drink, being older, male, self-employed, or a farm or fishery worker were
positively associated, and higher education levels were negatively associated with consumption level. The findings for gender and education were generally similar to those
of studies using U.S. or Canadian data on alcohol consumption. The role of household
level economic factors, family composition, and residence in alcohol consumption decisions appears to differ across cultures, however.
KEY WORDS: alcohol consumption; Korea; double-hurdle model.
Deanna L. Sharpe is Assistant Professor in the Department of Consumer and Family
Economics, University of Missouri, Columbia, MO 65211; e-mail: SharpeD噝
missouri.edu. Her research interests include consumption economics, influence of lifetime labor market participation and financial decisions on later life economic wellbeing, health care, and economics of aging.
Mohamed Abdel-Ghany is Professor in the Consumer Sciences Department and Director of International Affairs, College of Human Environmental Sciences, University
of Alabama, Tuscaloosa, AL 35487-0158; e-mail: mabdel-g噝ches.ua.edu. His research
interests include consumption economics, income inequality, and quality of life.
Hye-Yeon Kim is Associate Professor in the Department of Home Management,
Cheju National University, Cheju, Korea; e-mail: morning噝cheju.cheju.ac.kr. Her research interests include consumption economics and health care.
Gong-Soog Hong is Professor and Head in the Department of Human Environments,
Utah State University, Logan, UT 84322. Her research interests include economic wellbeing of older individuals, health care, and consumption and saving behavior.
Journal of Family and Economic Issues, Vol. 22(1), Spring 2001
䉷 2001 Human Sciences Press, Inc.
7
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Journal of Family and Economic Issues
Introduction
Economic analysis of alcohol demand in Korea is important for at
least two major reasons. First, while a large body of empirical literature related to alcohol demand exists, virtually all of this work has
focused on Western developed nations, specifically, the United States,
the United Kingdom, Canada, and Australia. (For reviews of such
studies, see Ornstein, 1980; Ornstein & Levy, 1983; Leung & Phelps,
1993.) Factors associated with alcohol demand in Korea have not
been analyzed. As a Far Eastern country experiencing recent and
rapid economic growth, Korea stands in contrast to the long established Western, developed economies that have been the focus of previous studies of alcohol demand. Second, between 1985 and 1995, real
spending on alcoholic beverages by Korean households increased
156% (Bank of Korea, 2000; National Statistical Office of Korea, 1985;
National Statistical Office of Korea, 1995). Evidence exists that
changing social norms in Korea may be contributing to higher levels
of alcohol expenditures and consumption (“Statistics On,” 1996; “The
Expenditures For,” 1996; Inje University Center for Alcohol Studies,
1999; “The Rapid Increase,” 1997). It is a well-established fact that
excessive alcohol consumption can have negative health and social
implications (Sindelar, 1998). Knowledge of factors associated with
alcohol demand can be crucial in developing programs to address alcohol abuse and alcohol related problems (Hilton, 1993). Knowledge of
such factors can also have public policy implications for influencing
the type and amount of alcohol consumption or for generating tax
revenue (Ornstein, 1980; Ornstein & Hanssens, 1985).
This study uses data from the 1996 Korean Household Panel Study
to examine the socioeconomic and demographic factors associated
with demand for alcohol in Korea. A double-hurdle model is used to
permit separate analysis of the factors associated with the decision
to consume alcohol or not and with the decision of how much alcohol
to consume. Findings using Korean data are compared and contrasted
with findings for similar studies using data from Western developed
nations. Policy implications are discussed.
Background
Traditional Korean culture encourages drinking among men. When
a young Korean man’s father offers him his first drink, it is a rite of
passage into adult life and adult drinking customs. After school or
D. L. Sharpe, M. Abdel-Ghany, H.-Y. Kim, and G.-S. Hong
9
work, men get together and drink at special drinking establishments
and may move from establishment to establishment, drinking through
the night. In these establishments, alcohol consumption is part of social custom and exchange, contributing to a shared group identity,
fostering frank conversations, and easing conflict resolution. In this
environment supportive of male drinking, it is not surprising that
over 80% of Korean men report consuming alcohol on a regular basis
(“The Expenditures For,” 1996).
In the past, women have been excluded from drinking establishments. Alcohol consumption by women was not considered socially
acceptable behavior. However, there is evidence that attitudes and
behavior are changing. A public opinion poll conducted in 1998 asked
500 randomly selected adult Korean women about women’s drinking.
Nearly half (48.6%) asserted “it is up to the individual” whereas only
14.4% thought “they should never do it” (People and Society Research, 1998). This permissive attitude is clearly reflected in women’s
behavior. The Korean Gallup Institute found that 61.2% of Korean
women reported drinking alcohol in 1997, up from 26.1% just five
years earlier (“The Rapid Increase,” 1997). Drinking is more prevalent among young women. The same source notes that 83.3% of
women in their early 20s reported drinking alcohol as compared with
32.9% of women in their 50s. These figures suggest that gender differences in alcohol consumption may be decreasing.
A recent survey of 1,685 adult male and female Koreans found that
22.6% drank less than once per month, 49.5% drank once or twice a
week, and 27.9% drank three or more times per week. A closer examination of the characteristics of the group that drank three or more
times per week revealed most were over age 55 (39.6%), had only an
elementary school education (50%), and lived in a rural area (35.1%)
(“Drinking Behavior,” 1997). Another study by the Korean Statistics
Institute conducted in 1995 found that nearly two-thirds of Koreans
over age 20 drank alcohol once a month or more. More men than women
reported drinking alcohol, 83% compared to 44.6%, respectively. These
figures represented a slight decrease for men but an 11.6% increase for
women compared to 1992. Men were more likely to be frequent
drinkers; 35.1% reported drinking two to four times per month. Most
women who reported drinking said they drank less than once a month
(60.3%) (“Statistics On,” 1996; “The Expenditures For,” 1996).
To the extent that changing social attitudes and norms lead to increased alcohol consumption, it is likely that alcohol-related problems
will also increase. The Center for Alcohol Studies at Inje University
estimates there are currently 3.5 million alcoholics in Korea but this
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Journal of Family and Economic Issues
number could be a serious understatement given cultural reticence to
seek help for alcohol-related problems (Inje University Center for Alcohol Studies, 1997). Recently, Korean media has focused attention
on the social costs of alcohol consumption including family problems,
criminal behavior, and death, injury or destruction of property due to
drunk driving (SBS Broadcast, 1997). This attention has been unusual in a culture that has tended to discount and conceal alcoholrelated problems.
Korean public records indicate that social costs associated with alcohol consumption are high. Between 1990 and 1997, the percentage
of injuries in vehicular accidents due to alcohol rose from 3.3 to 10.5
while the percentage of alcohol-related deaths rose from 3.1 to 8.7
(Korean Road Traffic Safety Authority, 1996; Korean Road Traffic
Safety Authority, 1997). A survey of 340 individuals charged with
murder revealed that nearly 3 out of 4 were drunk at the time of the
murder (Korean Institute of Criminology, 1991). Korea leads other
developed nations in number of deaths per 100,000 population due to
alcohol-related liver disease. The statistics for Korea are almost five
times higher than those for the United Kingdom, almost three times
higher than those for the United States, and slightly over two times
higher than those for Japan (Korean Institute for Health and Social
Affairs, 1993). The Korean Institute for Health and Social Affairs estimates that the direct and indirect economic costs of drinking in the
form of such things as decreased labor productivity, injury, property
damage, and death amounted to almost 4% of gross domestic production in 1995 (Korean Institute for Health and Social Affairs, 1997).
Taken together, these social trends point to several issues. First, as
social sanctions against women drinking alcohol relax, overall spending on and consumption of alcohol are likely to increase. Second, increased consumption of alcohol especially by young women is a concern. The health risks of alcohol consumption appear to be greater for
women than for men because of the adverse effects alcohol can have
during pregnancy (Floyd, Ebrahim, & Boyle, 1999). Third, increased
alcohol consumption may exacerbate alcohol-related problems already
recognized in Korea. These issues highlight the importance of conducting an economic analysis of alcohol demand in Korea.
Review of Literature
Many early economic studies of alcohol demand used aggregate
time series data from the United States, Canada, United Kingdom, or
D. L. Sharpe, M. Abdel-Ghany, H.-Y. Kim, and G.-S. Hong
11
Australia to obtain single equation demand estimates. Some of these
studies focused on aggregate demand (see, for example, Duffy, 1983;
Johnson & Oksanen, 1974; McGuinness, 1980) while others have examined demand for various types of alcoholic beverages such as beer
(Hogarty & Elzinga, 1972), distilled spirits (Ornstein & Hanssens,
1985), and imported and domestic alcoholic beverages (Adrian & Ferguson, 1987). Other researchers have used aggregate time series data
to estimate demand systems for alcoholic beverages. Some of this
work focused on demand for alcohol in general (Thom, 1984; Clements & Selvanathan, 1987; 1991) while some focused on specific types
of alcohol, including beer, wine, and spirits (Clements & Johnson,
1983). These studies give insight into the relationship between aggregate expenditure levels for alcoholic beverages and macro-level factors such as the aggregate price of alcohol and aggregate advertising
expenditures for alcohol. Aggregate data, however, cannot answer
questions about the relationship between household level social, economic, and demographic characteristics and alcohol demand. Consequently, several researchers have utilized household expenditure
data from the United States, Canada, United Kingdom, and Australia
(Abdel-Ghany & Silver, 1998; Atkinson, Gomulka, & Stern, 1990;
Johnson & Oksanen, 1974; Labys, 1976; Yen & Jensen, 1996) and
household food consumption data from the United States (Blaylock &
Blisard, 1993a, 1993b; Heien & Pompelli, 1989; Yen, 1994, 1995).
The advantage of household survey data is that detailed individual
and household characteristics are reported. This information is not
available in aggregate time series on alcohol demand. A major limitation of household survey data for research on alcohol demand, however, is that the decision to use alcohol is not only influenced by economic factors, but by social and health considerations as well. Many
individuals would not purchase or consume alcohol even if their income increased substantially or the price dropped dramatically. Consequently, measures of alcohol expenditures or consumption at the
individual or household level may contain a large proportion of zeros.
In such cases, ordinary least squares regression is inappropriate as it
will lead to biased and inconsistent estimates (Maddala, 1983). Thus,
another empirical model is needed.
The double-hurdle model has generally proven superior to Tobit
models (Tobin, 1958) for modeling alcohol demand given the large
proportion of zeros in measures of the dependent variable (Blaylock &
Blisard, 1993a, 1993b; Yen & Jensen, 1996). The double-hurdle model
features two separate stochastic processes. These two processes allow
the decision to participate (i.e., to drink alcohol) to be analyzed sep-
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Journal of Family and Economic Issues
arately and apart from the decision of how much to consume, thus
providing more meaningful insights on consumer behavior than the
Tobit model (Cragg, 1971). Research using a double-hurdle model
with household level data has relied on U.S. and Canadian data
sources. This research includes analysis of wine consumption by
American men (Blaylock & Blisard, 1993a), alcohol consumption by
American women (Blaylock & Blisard, 1993b; Yen, 1995), and assessments of level and determinants of household alcohol demand in the
United States (Yen, 1994; Yen & Jensen, 1996) and in Canada (AbdelGhany & Silver, 1998).
Studies that have applied a double-hurdle model to data from the
USDA Nationwide Food Consumption Survey (Blaylock & Blisard,
1993a, 1993b; Yen, 1994) have generally found that likelihood of participation is higher for males and females of prime drinking age (25 to
35 and 36 to 49 for males, 18 to 24 for females), those who are white,
a homeowner, reside in urban areas in the Western portion of the
United States, have relatively high income, smoke, and do not receive
food stamps. In addition, research that focused on women found that
those who were pregnant or lactating or believed they were in poor
health were less likely to consume alcohol (Yen, 1995). Among those
who consume alcohol, relatively heavy drinkers were likely to be a
male over age 17 or a female between the ages of 25 to 49, and white.
A price increase in alcohol, food stamp receipt, rural residence, residence in regions other than the West, and presence of children under
age 18 in the home were associated with lower levels of alcohol consumption among those who drank.
Analyses using expenditure data have generally yielded results
similar to analyses using consumption data. Yen and Jensen (1996)
used U. S. Consumer Expenditure Diary Surveys for 1989 and 1990
to examine alcohol demand, asserting that they expected “the expenditure decision to coincide with the consumption decision” (p. 50).
They found that the decision to consume was positively associated
with having a household member aged 19 to 64, higher income levels,
and being male. Being older and residing in the urban northeast as
compared with rural residence made alcohol consumption less likely.
Among alcohol consumers, relatively heavy drinkers were apt to be
between age 19 and 64, although older ages were negatively associated
with alcohol consumption. Higher levels of income and education, being
white, and urban residence were also characteristic of relatively heavy
drinkers. Having children under age 18 in the home and being married
were negatively associated with level of alcohol consumption. Inter-
D. L. Sharpe, M. Abdel-Ghany, H.-Y. Kim, and G.-S. Hong
13
estingly, homeownership, as a proxy for asset holdings, was significant
and positive in the Tobit model that Yen and Jensen (1996) examined as
an alternative but it was not significant in the double-hurdle model.
Abdel-Ghany and Silver (1998) examined the economic and demographic factors associated with use of and spending on alcohol in Canadian households. Using the 1990 Survey of Family Expenditures published by Statistics Canada, they found that the probability of spending
on alcohol was higher if the reference person was male, reported having
higher levels of education and, interestingly, if the reference person’s
occupation was a teacher. Among households reporting alcohol expenditures, age was a significant factor in decreasing expenditures while
higher income and education levels and being male were associated
with increasing expenditure levels. Some regional differences in alcohol expenditures were also noted. Residents in the Atlantic Provinces
spent significantly less on alcohol than British Columbia residents did.
Prior research suggests that household composition and individual
and household characteristics have significant effects on alcohol consumption. In general, the participation decision is negatively associated with age, but positively associated with education, income, and
health. Race, ethnicity, and region also have effects, perhaps influencing social norms relative to alcohol consumption among various groups
and in various residential locations. Decisions regarding the level of
alcohol to consume appear to be positively associated with presence
of individuals of prime age for drinking and relatively higher levels of
income and education. For the United States and Canada, there is
evidence that regional differences exist. Higher prices for alcohol or
having children under age 18 in the home were negatively associated
with alcohol consumption among those who drank.
Method
Data
Data for this study are from the 1996 Korean Household Panel Study, the
fourth national data collection by the Daewoo Economic Research Institute in
Seoul, Korea (Daewoo Economic Research Institute, 1996). The survey, conducted yearly since 1993, was designed to obtain information about the social
and economic activities of individuals and households in Korea. The survey
sample was selected by multi-stage stratified random sampling techniques.
Because these data report both individual and household characteristics, they
provide a unique opportunity to examine Korean alcohol drinking behavior.
14
Journal of Family and Economic Issues
Sample
The sample for this study consisted of 6,048 individuals. Of these, 3,102
had responded “yes” to the question “Do you drink?” while 2,946 had responded “no.”
Model
Consumer demand theory postulates that a household chooses among consumer goods with a goal of maximizing utility subject to a budget constraint.
Thus, the household acts to solve the constrained utility maximization problem:
Max [u (y, h) ⱍ py ⳱ b]
y
[1]
where y is a vector of consumer goods, p is a vector of corresponding prices, h
is a vector of household characteristics, and b is the household budget. If the
utility function u (y, h) is assumed to be continuous, increasing, and quasiconcave, then the demand for a given consumer good such as alcohol can be
expressed as a demand function of the form f (p, h, b). Since price information
is usually not available in cross-sectional data and the Korean Household
Panel Study is no exception, of necessity, it was assumed that all households
face the same relative prices. The consumption equation then becomes g (h,
b).
Analysis of alcohol demand raises an important consideration. A large proportion of those surveyed may report zero consumption of alcohol during the
survey period. Tobit analysis would permit parameter estimation in such instances (Madalla, 1983). Tobit has been rejected, however, as an appropriate
model for alcohol consumption because it forces zero observations to represent
corner solutions and presumes that the same set of variables and parameter
estimates determine both the discrete probability of a nonzero outcome and
the level of positive expenditures (Blaylock & Blisard, 1993b; Yen, 1994; Yen
& Jensen, 1996).
The double-hurdle model specifies a participation equation, X␣ Ⳮ ␮, and a
consumption equation, Y␤ Ⳮ ε, such that consumption, C, is modeled as:
C ⳱ Y␤ Ⳮ ε if X␣ Ⳮ ␮ ⬎ 0 and Y␤ Ⳮ ε ⬎ 0
⳱0
otherwise
[2]
where X and Y are vectors of explanatory variables, ␣ and ␤ are vectors of
parameters, and ␮ and ε are the error terms (Cragg, 1971).
Variables
Respondents in the 1996 Korean Household Panel Study reported whether
they did or did not drink alcohol. Thus, the dependent variable of the partici-
D. L. Sharpe, M. Abdel-Ghany, H.-Y. Kim, and G.-S. Hong
15
pation equation is binary: 1 if drink, 0 otherwise. Following standard practice
in the literature, this equation was estimated as a Probit model (Blaylock &
Blisard, 1993a, 1993b; Cragg, 1971; Yen & Jensen, 1996). While it would be
preferred to measure volume of consumption, data limitations necessitated
use of the number of drinks consumed per week by the survey respondent as
the dependent variable. The consumption equation is estimated using truncated regression analysis.
The explanatory variables were selected on the basis of demand theory and
precedent in the literature. Continuous variables included yearly household
income in won, household assets in won, number of children under age 18 in
the home, and respondent’s age. Dummy variables were used to control for
marital status (1 if married, 0 otherwise), respondent gender (1 if male, 0
otherwise), and residence (1 if urban, 0 otherwise). Education level of respondent has three categories: middle school graduate (reference category), high
school graduate, and college graduate. Occupation is categorized as salaried
worker, self-employed worker, farm & fishery worker, housewife (reference
category), and student, part-time or temporary worker.
Hypotheses
In general, it was hypothesized that the sign and significance of parameter
estimates using Korean data will parallel previous research using U.S. and
Canadian data and the double-hurdle model. Thus, higher income and assets
are expected to increase both probability of participation and level of consumption. Younger respondents, it was hypothesized, are more likely to participate in alcohol consumption. But, because alcohol consumption can be
habit-forming, it was expected that the association between age and level of
consumption is positive. Having young children in the home or being married
is expected to discourage both participation and consumption. Because of cultural norms in Korea, it is hypothesized that males will both be more likely to
drink and will drink more than females.
The effect of education in the Korean culture is difficult to predict. A priori,
a negative relationship between educational level and drinking of alcohol was
expected. More educated individuals should be more cognizant of the damaging effects of drinking on health. However, evidence from studies based on
U.S. and Canadian data is that higher levels of education are associated with
participation (Abdel-Ghany & Silver, 1998; Blaylock & Blisard, 1993b; Yen,
1995) and higher levels of consumption (Yen & Jensen, 1996). Therefore, it
was hypothesized that a significant relationship exists between educational
level and alcohol consumption decisions in Korea, but the direction of that
relationship was not specified.
Little precedent exists to make hypotheses regarding the relationship between occupations and alcohol consumption. Previous research using U.S.
data only distinguished between white collar and other occupations. In some
cases it was not a significant factor (Yen, 1995) while in others, it was a positive factor in the participation decision (Blaylock & Blisard, 1993a). AbdelGhany and Silver (1998) used six occupational categories of Canadian consumers: manager/professional, sales/services, teacher, blue collar, retired or
16
Journal of Family and Economic Issues
not working, other (reference group). They found teachers were more likely
than other occupations to drink alcohol. Thus, it seems reasonable to speculate that, in Korea, certain occupations may be associated with a greater likelihood of drinking alcohol, although it would be difficult to identify those occupations, a priori. There does not seem to be a basis for speculating that higher
levels of consumption are associated with certain occupations, therefore, no
significant relationship between occupation and the level of alcohol consumed
was expected.
In general, previous studies have found that rural residents were less likely
to drink alcohol than urban residents were. It was not always a significant
factor in level of consumption, however. Measures of residence have varied.
Blaylock and Blisard (1993a, 1993b) compared city to non-city residence. Yen
(1994, 1995) and Yen and Jensen (1996) compared rural residence to residence in various urban regions. It was expected that rural residents in Korea
would be less likely to drink alcohol than urban residents would, but it was
not clear that rural residence would affect level of alcohol consumed.
Findings and Discussion
Sample Characteristics
Table 1 shows the independent variables used to specify the participation and expenditure equations. For each variable, the sample average or percentage over the full sample, over the subset of 3,102
observations on those who chose to drink, and over the 2,946 observations on those who did not choose to drink is given. In general, average yearly income for households in the drinkers’ subset was more
than the average income in the non-drinkers’ households. Conversely,
the total assets of nondrinkers were slightly higher than the total
assets of drinkers. (In the table, figures for income and assets are also
presented in terms of U.S. dollars.) The respondents in the nondrinkers’ subset were older, less educated, and more apt to be married, females, and housewives compared with their counterparts in
the drinkers’ subset.
Parameter Estimates for Participation and Consumption Equations
The double hurdle model was estimated using LIMDEP (Greene,
1995). The parameter estimates of the model are shown in Table 2. In
general, the expected relationships were confirmed. Findings of this
research suggest that, in Korea, individual and household characteristics are significantly related to both the decision to drink alcohol
and the decision about how much alcohol to consume as they have
D. L. Sharpe, M. Abdel-Ghany, H.-Y. Kim, and G.-S. Hong
17
TABLE 1
Means and Proportions of the Independent Variables for Non-drinkers,
Drinkers, and Total Sample
Means
Household incomea
Household assets
a
Respondent age
Number of children aged 18 and
under in the household
Proportions
Respondent married
Respondent male
Education level of respondent
middle school graduate
high school graduate
college graduate
Occupation of respondent
salaried worker
self-employed worker
farm & fishery worker
housewife
student, part-time, or temporary
worker
Urban residence
Non-drinkers
(N ⳱ 2,946)
Drinkers
(N ⳱ 3,102)
Total sample
2470.91
($3,082.95)
10647.70
($13,285.12)
42.55
2753.68
($3,435.76)
10543.07
($13,154.57)
38.43
2593.20
($3,235.53)
10538.00
($13,148.25)
40.44
0.50
0.55
0.53
82
24
77
72
79
49
46
38
16
26
45
29
35
42
23
18
11
5
48
38
20
7
15
28
16
6
32
18
48
19
53
18
50
a
Korean Won reported in units of 1,000. U.S. dollar equivalent, calculated using the 336
day average exchange rate for 1996, is given in parenthesis (Oanda, 2000).
been in Western developed nations. Some interesting differences exist, however, all of which suggest that cultural norms regarding alcohol consumption may dominate the decision-making process in Korea.
Income was a significant and positive factor in both the participation
and consumption decision when U.S. expenditure data were used
(Yen & Jensen, 1996) and in the participation decision when U.S. consumption data were used (Blaylock & Blisard, 1993a; Yen, 1995). Its
lack of significance in the analysis of Korean data suggests that alcohol consumption is not sensitive to a change in income. Thus, if reduction of alcohol consumption becomes a national goal in Korea, all else
being equal, imposing a higher tax on alcohol is not likely to have
much effect. Asset holdings (proxied as homeownership) were not a
significant factor for U.S. alcohol expenditures in Yen and Jensen
(1996). However, it was a positive factor in the decision to consume
18
Journal of Family and Economic Issues
TABLE 2
Results of Binomial Probit and Truncated Regression for Alcohol
Consumption
Household income
Household assets
Respondent age
Respondent married
Respondent male
Number of children aged 18 and
under in the household
Education level of respondent
middle school graduate
(reference category)
high school graduate
college graduate
Occupation of respondent
housewife (reference category)
salaried worker
self-employed worker
Occupation of respondent
farm & fishery worker
student, part-time, or
temporary worker
Urban residence
Constant
␴a
log likelihood
N
Probit
(Participation decision)
Truncated regression
(Consumption decision)
0.90E-05
(0.664E-05)
ⳮ0.12E-05
(0.131E-05)
ⳮ0.02***
(0.002)
0.02
(0.056)
1.18***
(0.047)
0.01
(0.024)
0.74E-05
(0.782E-05)
0.56E-06
(0.144E-05)
0.01***
(0.002)
0.02
(0.071)
1.23***
(0.067)
ⳮ0.03
(0.029)
0.10
(0.050)
0.12*
(0.600)
0.30***
(0.057)
0.23***
(0.064)
0.26**
(0.089)
0.12*
(0.061)
0.05
(0.037)
ⳮ0.15
(0.103)
—
ⳮ3328.51***
6048
ⳮ0.17**
(0.062)
ⳮ0.34***
(0.071)
0.16
(0.086)
0.40***
(0.091)
0.50***
(0.114)
0.13
(0.093)
ⳮ0.06
(0.044)
0.86***
(0.131)
1.08***
(0.017)
ⳮ4314.579***
3102
a
For a technical explanation of the role of ␴ in ML estimation, see Greene (1995).
***p ⬍ .001.
**p ⬍ .01.
*p ⬍ .05.
D. L. Sharpe, M. Abdel-Ghany, H.-Y. Kim, and G.-S. Hong
19
alcohol in Yen (1995). Household asset holdings were not a significant
factor in either the participation or consumption decision in Korea.
In contrast to studies using U.S. data, the number of children aged
18 and under, marital status and urban residence were not significant
factors in alcohol use and consumption levels in Korea. This finding
may imply that alcohol consumption is an activity rather evenly distributed throughout the population, regardless of family composition
or residence. Consequently, this research provides no support for segmenting the Korean population on the basis of family composition or
residence for either alcohol marketing or providing treatment programs for alcohol-related problems.
In contrast to studies using U.S. and Canadian data (Abdel-Ghany
& Silver, 1998; Yen & Jensen, 1996; Yen, 1995) the sign and significance of the coefficient on respondent’s age and respondent’s education differs across the participation and consumption equations. Ceteris paribus, the probability of drinking was negatively related to
age, however, the level of drinking increased with age for those who
chose to drink. The probability of drinking increased for respondents
who were college graduates compared with those respondents who
were middle school graduates. However, the level of consumption of
alcohol decreased as educational level of respondent increased, supporting our initial hypothesis regarding the negative relationship between the amount of drinking and the level of education. These findings suggest that education can play a role in Korean public policy
designed to reduce alcohol consumption.
Given the cultural norms in Korea, it is not surprising that gender
differences in drinking behavior were found. Male respondents were
more likely to drink than female respondents were. Among those who
chose to drink, male respondents were likely to drink more than female respondents were. These results support our stated hypothesis
regarding Korean culture and its restrictive norms on women drinking. Having gender be a significant factor in both the participation
and consumption decisions was unique to Korea. Using U.S. data, Yen
and Jensen (1996) found that being male was a significant factor in
the participation decision, but not the consumption decision. Conversely, using Canadian data, Abdel-Ghany and Silver (1998) found
that being male was significant in the consumption decision, but not
the participation decision. Interacting gender with various age categories, Yen (1994) noted both participation and consumption in the
U.S. were significantly higher for males aged 25–34 and 35–49 and
significantly lower for females aged 64 and older. The use of interac-
20
Journal of Family and Economic Issues
tion terms, however, precludes a direct comparison with the results of
this study.
The probability of the respondent drinking alcohol was significantly
higher if their occupation was different from housewife. Since only
Korean women would state “housewife” as an occupation, this finding
for occupation further underscored gender differences in the choice to
drink alcohol or not. It is interesting that, among those who drink,
the self-employed and the farm and fishery worker consumed significantly more than the housewife while the salaried worker and student or part-time or temporary worker did not. Further research on
the effect of occupation on alcohol consumption decisions might shed
some light on reasons for these differences. Comparison of results related to occupation between this study and studies using Western
data is difficult to make. Occupational categories may differ between
countries. Occupation is both influenced by and, in turn, influences a
variety of cultural factors that may be unique to a given location.
Also, relatively few researchers using data from Western countries
considered the possible influence of occupation on decisions to drink
or how much to drink. Of those who did, Yen (1995) did not find it to
be a significant factor in analysis of the alcohol consumption decisions
of American women. Abdel-Ghany and Silver (1998) noted that
teachers in Canada were more likely than other occupations to drink
alcohol, however, they did not find occupation had a significant influence on how much one chose to drink.
Considered as a whole, the findings of this research suggest that in
Korea, as in Western developed nations, it is the young men with
higher levels of education who generally choose to drink. Unlike findings for Western nations, however, higher education appears to discourage relatively heavy consumption in Korea among those who
choose to drink. Whether the findings for gender reflect a cohort or a
lifecycle effect cannot be ascertained from cross-sectional data. It is
interesting, however, that despite long-standing liberalized attitudes
regarding women drinking in Western cultures, gender difference in
consumption and participation persists. Since attitudes toward women
drinking in Korea are just now beginning to be challenged, it is likely
that gender differences in alcohol consumption decisions will persist for
quite some time. Significant cultural change does not usually happen
quickly.
In Korea, the decision to drink and the decision of how much to
consume did not appear to be affected by household economic resources, family composition, or residence. These findings stood in stark
contrast to those using data from Western countries where relatively
D. L. Sharpe, M. Abdel-Ghany, H.-Y. Kim, and G.-S. Hong
21
lower household income levels, presence of young children or a spouse,
and rural residence generally discouraged either participation or consumption levels (Abdel-Ghany & Silver, 1998; Blaylock & Blisard, 1993a,
1993b; Yen, 1994, 1995; Yen & Jensen, 1996). It may be that Korean
culture is more homogeneous than that of the U.S. or Canada. Or, the
cultural norms regarding alcohol consumption may dominate the decision making process. Whatever the reason for the differences between
Korea and Western developed nations relative to alcohol consumption
decisions, it is clear that targeted methods to market alcohol or to reach
those with alcohol-related problems cannot simply be exported from the
West to the Far East. At the same time, the Korean experience with
direct and indirect costs of excessive alcohol consumption does seem to
shadow that of the West. It is fair to say that the health and social costs
of excessive alcohol consumption transcend cultural differences. Therefore, Korea may need to develop methods of reaching its own at-risk
population that differ from methods used in Western cultures.
A recent issue regarding alcohol and Korea points to a direction for
future research. In 1999, the nation of Korea came under severe criticism
from the World Trade Organization (WTO) for the wide gap between tax
rates imposed on imported and domestic alcohol. Imported whisky and
brandy faced tax rates of 100%, while imported vodka, rum, and gin were
taxed at 80%. The liquor tax on domestically produced soju was only
35%. In addition to the liquor tax, Korea levies an “education tax” of 30%
on imported and 10% on domestic spirits (European Business Community, 1999). These facts suggest that the Korean government has used
alcohol-related taxes both to raise revenues and to encourage purchase of
domestic alcohol. It would be of interest to know what proportion of
Korean alcohol consumption is related to imported versus domestic
spirits. If, as WTO sanctions propose, the tax on imported spirits is
reduced, will consumption of alcohol in Korea increase overall or will the
proportion of existing consumption simply change? Price data would be
necessary to estimate consumer response to a change in tax rate. However, the fact that income was not a significant factor in alcohol consumption decisions in this research provides at least indirect evidence that
Korean alcohol consumers are not price sensitive.
Summary
Findings of this research suggest that the Korean most likely to
purchase alcoholic beverages is a young male with a college degree. A
relatively heavy drinker in Korea can be typified as a male who has a
22
Journal of Family and Economic Issues
middle school education and who is self-employed or works in farming
or fishery.
The results of this research underscore the importance of using a
two-step approach to alcohol consumption modeling. Parameter estimates of the double-hurdle model show that the effect of age, education level and occupation of the respondent was different in each decision step. Thus, this approach provided more information than the
Tobit model would have provided regarding the unique role of each
variable in the participation and consumption decisions. This additional information may be valuable for understanding consumer behavior in the alcoholic beverages market and for developing public
awareness programs. Given differences found in this analysis and analyses using data from Western nations, it is clear that Korea will
need to develop its own approach to segmenting the alcohol market
for marketing or policy.
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