alcohol consumption decisions in korea

Journal of Family and Economic Issues, Vol. 22(1), Spring 2001� 2001 Human Sciences Press, Inc. 7

Alcohol Consumption Decisions in Korea

Deanna L. SharpeUniversity of Missouri

Mohamed Abdel-GhanyUniversity of Alabama

Hye-Yeon KimCheju National University

Gong-Soog HongUtah State University

ABSTRACT: Data from the 1996 Korean Household Panel Study and a double-hurdlemodel were used to analyze alcohol consumption decisions in Korea. The Korean mostlikely to consume alcoholic beverages is a young male, and a college graduate. Amongthose who drink, being older, male, self-employed, or a farm or fishery worker werepositively associated, and higher education levels were negatively associated with con-sumption level. The findings for gender and education were generally similar to thoseof studies using U.S. or Canadian data on alcohol consumption. The role of householdlevel economic factors, family composition, and residence in alcohol consumption deci-sions 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 FamilyEconomics, University of Missouri, Columbia, MO 65211; e-mail: SharpeD�missouri.edu. Her research interests include consumption economics, influence of life-time labor market participation and financial decisions on later life economic well-being, health care, and economics of aging.

Mohamed Abdel-Ghany is Professor in the Consumer Sciences Department and Di-rector of International Affairs, College of Human Environmental Sciences, Universityof Alabama, Tuscaloosa, AL 35487-0158; e-mail: mabdel-g�ches.ua.edu. His researchinterests 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�cheju.cheju.ac.kr. Her re-search 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 well-being of older individuals, health care, and consumption and saving behavior.

8 Journal of Family and Economic Issues

Introduction

Economic analysis of alcohol demand in Korea is important for atleast two major reasons. First, while a large body of empirical litera-ture related to alcohol demand exists, virtually all of this work hasfocused on Western developed nations, specifically, the United States,the United Kingdom, Canada, and Australia. (For reviews of suchstudies, see Ornstein, 1980; Ornstein & Levy, 1983; Leung & Phelps,1993.) Factors associated with alcohol demand in Korea have notbeen analyzed. As a Far Eastern country experiencing recent andrapid economic growth, Korea stands in contrast to the long estab-lished Western, developed economies that have been the focus of pre-vious studies of alcohol demand. Second, between 1985 and 1995, realspending on alcoholic beverages by Korean households increased156% (Bank of Korea, 2000; National Statistical Office of Korea, 1985;National Statistical Office of Korea, 1995). Evidence exists thatchanging social norms in Korea may be contributing to higher levelsof alcohol expenditures and consumption (“Statistics On,” 1996; “TheExpenditures For,” 1996; Inje University Center for Alcohol Studies,1999; “The Rapid Increase,” 1997). It is a well-established fact thatexcessive alcohol consumption can have negative health and socialimplications (Sindelar, 1998). Knowledge of factors associated withalcohol demand can be crucial in developing programs to address al-cohol abuse and alcohol related problems (Hilton, 1993). Knowledge ofsuch factors can also have public policy implications for influencingthe type and amount of alcohol consumption or for generating taxrevenue (Ornstein, 1980; Ornstein & Hanssens, 1985).

This study uses data from the 1996 Korean Household Panel Studyto examine the socioeconomic and demographic factors associatedwith demand for alcohol in Korea. A double-hurdle model is used topermit separate analysis of the factors associated with the decisionto consume alcohol or not and with the decision of how much alcoholto consume. Findings using Korean data are compared and contrastedwith findings for similar studies using data from Western developednations. Policy implications are discussed.

Background

Traditional Korean culture encourages drinking among men. Whena young Korean man’s father offers him his first drink, it is a rite ofpassage 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 establishmentsand may move from establishment to establishment, drinking throughthe night. In these establishments, alcohol consumption is part of so-cial custom and exchange, contributing to a shared group identity,fostering frank conversations, and easing conflict resolution. In thisenvironment supportive of male drinking, it is not surprising thatover 80% of Korean men report consuming alcohol on a regular basis(“The Expenditures For,” 1996).

In the past, women have been excluded from drinking establish-ments. Alcohol consumption by women was not considered sociallyacceptable behavior. However, there is evidence that attitudes andbehavior are changing. A public opinion poll conducted in 1998 asked500 randomly selected adult Korean women about women’s drinking.Nearly half (48.6%) asserted “it is up to the individual” whereas only14.4% thought “they should never do it” (People and Society Re-search, 1998). This permissive attitude is clearly reflected in women’sbehavior. The Korean Gallup Institute found that 61.2% of Koreanwomen reported drinking alcohol in 1997, up from 26.1% just fiveyears earlier (“The Rapid Increase,” 1997). Drinking is more preva-lent among young women. The same source notes that 83.3% ofwomen in their early 20s reported drinking alcohol as compared with32.9% of women in their 50s. These figures suggest that gender differ-ences in alcohol consumption may be decreasing.

A recent survey of 1,685 adult male and female Koreans found that22.6% drank less than once per month, 49.5% drank once or twice aweek, and 27.9% drank three or more times per week. A closer exam-ination of the characteristics of the group that drank three or moretimes per week revealed most were over age 55 (39.6%), had only anelementary school education (50%), and lived in a rural area (35.1%)(“Drinking Behavior,” 1997). Another study by the Korean StatisticsInstitute conducted in 1995 found that nearly two-thirds of Koreansover age 20 drank alcohol once a month or more. More men than womenreported drinking alcohol, 83% compared to 44.6%, respectively. Thesefigures represented a slight decrease for men but an 11.6% increase forwomen compared to 1992. Men were more likely to be frequentdrinkers; 35.1% reported drinking two to four times per month. Mostwomen 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 in-creased alcohol consumption, it is likely that alcohol-related problemswill also increase. The Center for Alcohol Studies at Inje Universityestimates there are currently 3.5 million alcoholics in Korea but this


number could be a serious understatement given cultural reticence toseek help for alcohol-related problems (Inje University Center for Al-cohol Studies, 1997). Recently, Korean media has focused attentionon the social costs of alcohol consumption including family problems,criminal behavior, and death, injury or destruction of property due todrunk driving (SBS Broadcast, 1997). This attention has been un-usual in a culture that has tended to discount and conceal alcohol-related problems.

Korean public records indicate that social costs associated with al-cohol consumption are high. Between 1990 and 1997, the percentageof injuries in vehicular accidents due to alcohol rose from 3.3 to 10.5while the percentage of alcohol-related deaths rose from 3.1 to 8.7(Korean Road Traffic Safety Authority, 1996; Korean Road TrafficSafety Authority, 1997). A survey of 340 individuals charged withmurder revealed that nearly 3 out of 4 were drunk at the time of themurder (Korean Institute of Criminology, 1991). Korea leads otherdeveloped nations in number of deaths per 100,000 population due toalcohol-related liver disease. The statistics for Korea are almost fivetimes higher than those for the United Kingdom, almost three timeshigher than those for the United States, and slightly over two timeshigher than those for Japan (Korean Institute for Health and SocialAffairs, 1993). The Korean Institute for Health and Social Affairs es-timates that the direct and indirect economic costs of drinking in theform of such things as decreased labor productivity, injury, propertydamage, and death amounted to almost 4% of gross domestic produc-tion in 1995 (Korean Institute for Health and Social Affairs, 1997).

Taken together, these social trends point to several issues. First, associal sanctions against women drinking alcohol relax, overall spend-ing on and consumption of alcohol are likely to increase. Second, in-creased consumption of alcohol especially by young women is a con-cern. The health risks of alcohol consumption appear to be greater forwomen than for men because of the adverse effects alcohol can haveduring pregnancy (Floyd, Ebrahim, & Boyle, 1999). Third, increasedalcohol consumption may exacerbate alcohol-related problems alreadyrecognized in Korea. These issues highlight the importance of con-ducting an economic analysis of alcohol demand in Korea.

Review of Literature

Many early economic studies of alcohol demand used aggregatetime series data from the United States, Canada, United Kingdom, or


Australia to obtain single equation demand estimates. Some of thesestudies focused on aggregate demand (see, for example, Duffy, 1983;Johnson & Oksanen, 1974; McGuinness, 1980) while others have ex-amined 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 & Fer-guson, 1987). Other researchers have used aggregate time series datato estimate demand systems for alcoholic beverages. Some of thiswork focused on demand for alcohol in general (Thom, 1984; Clem-ents & Selvanathan, 1987; 1991) while some focused on specific typesof alcohol, including beer, wine, and spirits (Clements & Johnson,1983). These studies give insight into the relationship between aggre-gate expenditure levels for alcoholic beverages and macro-level fac-tors such as the aggregate price of alcohol and aggregate advertisingexpenditures for alcohol. Aggregate data, however, cannot answerquestions about the relationship between household level social, eco-nomic, and demographic characteristics and alcohol demand. Conse-quently, several researchers have utilized household expendituredata 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) andhousehold 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 individualand household characteristics are reported. This information is notavailable in aggregate time series on alcohol demand. A major limita-tion of household survey data for research on alcohol demand, how-ever, is that the decision to use alcohol is not only influenced by eco-nomic factors, but by social and health considerations as well. Manyindividuals would not purchase or consume alcohol even if their in-come increased substantially or the price dropped dramatically. Con-sequently, measures of alcohol expenditures or consumption at theindividual or household level may contain a large proportion of zeros.In such cases, ordinary least squares regression is inappropriate as itwill lead to biased and inconsistent estimates (Maddala, 1983). Thus,another empirical model is needed.

The double-hurdle model has generally proven superior to Tobitmodels (Tobin, 1958) for modeling alcohol demand given the largeproportion of zeros in measures of the dependent variable (Blaylock &Blisard, 1993a, 1993b; Yen & Jensen, 1996). The double-hurdle modelfeatures two separate stochastic processes. These two processes allowthe decision to participate (i.e., to drink alcohol) to be analyzed sep-


arately and apart from the decision of how much to consume, thusproviding more meaningful insights on consumer behavior than theTobit model (Cragg, 1971). Research using a double-hurdle modelwith household level data has relied on U.S. and Canadian datasources. This research includes analysis of wine consumption byAmerican men (Blaylock & Blisard, 1993a), alcohol consumption byAmerican women (Blaylock & Blisard, 1993b; Yen, 1995), and assess-ments of level and determinants of household alcohol demand in theUnited States (Yen, 1994; Yen & Jensen, 1996) and in Canada (Abdel-Ghany & Silver, 1998).

Studies that have applied a double-hurdle model to data from theUSDA Nationwide Food Consumption Survey (Blaylock & Blisard,1993a, 1993b; Yen, 1994) have generally found that likelihood of par-ticipation is higher for males and females of prime drinking age (25 to35 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 theUnited States, have relatively high income, smoke, and do not receivefood stamps. In addition, research that focused on women found thatthose who were pregnant or lactating or believed they were in poorhealth were less likely to consume alcohol (Yen, 1995). Among thosewho consume alcohol, relatively heavy drinkers were likely to be amale 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, resi-dence in regions other than the West, and presence of children underage 18 in the home were associated with lower levels of alcohol con-sumption among those who drank.

Analyses using expenditure data have generally yielded resultssimilar to analyses using consumption data. Yen and Jensen (1996)used U. S. Consumer Expenditure Diary Surveys for 1989 and 1990to examine alcohol demand, asserting that they expected “the expen-diture decision to coincide with the consumption decision” (p. 50).They found that the decision to consume was positively associatedwith having a household member aged 19 to 64, higher income levels,and being male. Being older and residing in the urban northeast ascompared with rural residence made alcohol consumption less likely.Among alcohol consumers, relatively heavy drinkers were apt to bebetween age 19 and 64, although older ages were negatively associatedwith alcohol consumption. Higher levels of income and education, beingwhite, and urban residence were also characteristic of relatively heavydrinkers. Having children under age 18 in the home and being marriedwere negatively associated with level of alcohol consumption. Inter-


estingly, homeownership, as a proxy for asset holdings, was significantand positive in the Tobit model that Yen and Jensen (1996) examined asan alternative but it was not significant in the double-hurdle model.

Abdel-Ghany and Silver (1998) examined the economic and demo-graphic factors associated with use of and spending on alcohol in Cana-dian households. Using the 1990 Survey of Family Expenditures pub-lished by Statistics Canada, they found that the probability of spendingon alcohol was higher if the reference person was male, reported havinghigher levels of education and, interestingly, if the reference person’soccupation was a teacher. Among households reporting alcohol expen-ditures, age was a significant factor in decreasing expenditures whilehigher income and education levels and being male were associatedwith increasing expenditure levels. Some regional differences in alco-hol expenditures were also noted. Residents in the Atlantic Provincesspent significantly less on alcohol than British Columbia residents did.

Prior research suggests that household composition and individualand household characteristics have significant effects on alcohol con-sumption. In general, the participation decision is negatively associ-ated with age, but positively associated with education, income, andhealth. Race, ethnicity, and region also have effects, perhaps influenc-ing social norms relative to alcohol consumption among various groupsand in various residential locations. Decisions regarding the level ofalcohol to consume appear to be positively associated with presenceof individuals of prime age for drinking and relatively higher levels ofincome and education. For the United States and Canada, there isevidence that regional differences exist. Higher prices for alcohol orhaving children under age 18 in the home were negatively associatedwith alcohol consumption among those who drank.

Method

Data

Data for this study are from the 1996 Korean Household Panel Study, thefourth national data collection by the Daewoo Economic Research Institute inSeoul, Korea (Daewoo Economic Research Institute, 1996). The survey, con-ducted yearly since 1993, was designed to obtain information about the socialand economic activities of individuals and households in Korea. The surveysample was selected by multi-stage stratified random sampling techniques.Because these data report both individual and household characteristics, theyprovide a unique opportunity to examine Korean alcohol drinking behavior.


Sample

The sample for this study consisted of 6,048 individuals. Of these, 3,102had responded “yes” to the question “Do you drink?” while 2,946 had re-sponded “no.”

Model

Consumer demand theory postulates that a household chooses among con-sumer goods with a goal of maximizing utility subject to a budget constraint.Thus, the household acts to solve the constrained utility maximization prob-lem:

Max [u (y, h) � py � b] [1]y

where y is a vector of consumer goods, p is a vector of corresponding prices, his a vector of household characteristics, and b is the household budget. If theutility function u (y, h) is assumed to be continuous, increasing, and quasi-concave, then the demand for a given consumer good such as alcohol can beexpressed as a demand function of the form f (p, h, b). Since price informationis usually not available in cross-sectional data and the Korean HouseholdPanel Study is no exception, of necessity, it was assumed that all householdsface the same relative prices. The consumption equation then becomes g (h,b).

Analysis of alcohol demand raises an important consideration. A large pro-portion of those surveyed may report zero consumption of alcohol during thesurvey period. Tobit analysis would permit parameter estimation in such in-stances (Madalla, 1983). Tobit has been rejected, however, as an appropriatemodel for alcohol consumption because it forces zero observations to representcorner solutions and presumes that the same set of variables and parameterestimates determine both the discrete probability of a nonzero outcome andthe level of positive expenditures (Blaylock & Blisard, 1993b; Yen, 1994; Yen& Jensen, 1996).

The double-hurdle model specifies a participation equation, X� � �, and aconsumption equation, Y� � ε, such that consumption, C, is modeled as:

C � Y� � ε if X� � � � 0 and Y� � ε � 0 [2]� 0 otherwise

where X and Y are vectors of explanatory variables, � and � are vectors ofparameters, and � and ε are the error terms (Cragg, 1971).

Variables

Respondents in the 1996 Korean Household Panel Study reported whetherthey did or did not drink alcohol. Thus, the dependent variable of the partici-


pation equation is binary: 1 if drink, 0 otherwise. Following standard practicein the literature, this equation was estimated as a Probit model (Blaylock &Blisard, 1993a, 1993b; Cragg, 1971; Yen & Jensen, 1996). While it would bepreferred to measure volume of consumption, data limitations necessitateduse of the number of drinks consumed per week by the survey respondent asthe dependent variable. The consumption equation is estimated using trun-cated regression analysis.

The explanatory variables were selected on the basis of demand theory andprecedent in the literature. Continuous variables included yearly householdincome in won, household assets in won, number of children under age 18 inthe home, and respondent’s age. Dummy variables were used to control formarital status (1 if married, 0 otherwise), respondent gender (1 if male, 0otherwise), and residence (1 if urban, 0 otherwise). Education level of respon-dent has three categories: middle school graduate (reference category), highschool graduate, and college graduate. Occupation is categorized as salariedworker, self-employed worker, farm & fishery worker, housewife (referencecategory), and student, part-time or temporary worker.

Hypotheses

In general, it was hypothesized that the sign and significance of parameterestimates using Korean data will parallel previous research using U.S. andCanadian data and the double-hurdle model. Thus, higher income and assetsare expected to increase both probability of participation and level of con-sumption. Younger respondents, it was hypothesized, are more likely to par-ticipate in alcohol consumption. But, because alcohol consumption can behabit-forming, it was expected that the association between age and level ofconsumption is positive. Having young children in the home or being marriedis expected to discourage both participation and consumption. Because of cul-tural norms in Korea, it is hypothesized that males will both be more likely todrink 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 wasexpected. More educated individuals should be more cognizant of the damag-ing effects of drinking on health. However, evidence from studies based onU.S. and Canadian data is that higher levels of education are associated withparticipation (Abdel-Ghany & Silver, 1998; Blaylock & Blisard, 1993b; Yen,1995) and higher levels of consumption (Yen & Jensen, 1996). Therefore, itwas hypothesized that a significant relationship exists between educationallevel and alcohol consumption decisions in Korea, but the direction of thatrelationship was not specified.

Little precedent exists to make hypotheses regarding the relationship be-tween occupations and alcohol consumption. Previous research using U.S.data only distinguished between white collar and other occupations. In somecases it was not a significant factor (Yen, 1995) while in others, it was a posi-tive factor in the participation decision (Blaylock & Blisard, 1993a). Abdel-Ghany and Silver (1998) used six occupational categories of Canadian con-sumers: manager/professional, sales/services, teacher, blue collar, retired or


not working, other (reference group). They found teachers were more likelythan other occupations to drink alcohol. Thus, it seems reasonable to specu-late that, in Korea, certain occupations may be associated with a greater like-lihood of drinking alcohol, although it would be difficult to identify those occu-pations, a priori. There does not seem to be a basis for speculating that higherlevels of consumption are associated with certain occupations, therefore, nosignificant relationship between occupation and the level of alcohol consumedwas expected.

In general, previous studies have found that rural residents were less likelyto drink alcohol than urban residents were. It was not always a significantfactor 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 resi-dence in various urban regions. It was expected that rural residents in Koreawould be less likely to drink alcohol than urban residents would, but it wasnot 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 partici-pation and expenditure equations. For each variable, the sample av-erage or percentage over the full sample, over the subset of 3,102observations on those who chose to drink, and over the 2,946 observa-tions on those who did not choose to drink is given. In general, aver-age yearly income for households in the drinkers’ subset was morethan the average income in the non-drinkers’ households. Conversely,the total assets of nondrinkers were slightly higher than the totalassets of drinkers. (In the table, figures for income and assets are alsopresented in terms of U.S. dollars.) The respondents in the non-drinkers’ subset were older, less educated, and more apt to be mar-ried, females, and housewives compared with their counterparts inthe 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. Ingeneral, the expected relationships were confirmed. Findings of thisresearch suggest that, in Korea, individual and household charac-teristics are significantly related to both the decision to drink alcoholand the decision about how much alcohol to consume as they have


TABLE 1

Means and Proportions of the Independent Variables for Non-drinkers,Drinkers, and Total Sample

Non-drinkers(N � 2,946)

Drinkers(N � 3,102) Total sample

MeansHousehold incomea 2470.91

($3,082.95)2753.68

($3,435.76)2593.20

($3,235.53)Household assetsa 10647.70

($13,285.12)10543.07

($13,154.57)10538.00

($13,148.25)Respondent age 42.55 38.43 40.44Number of children aged 18 and

under in the household 0.50 0.55 0.53Proportions

Respondent married 82 77 79Respondent male 24 72 49Education level of respondent

middle school graduate 46 26 35high school graduate 38 45 42college graduate 16 29 23

Occupation of respondentsalaried worker 18 38 28self-employed worker 11 20 16farm & fishery worker 5 7 6housewife 48 15 32student, part-time, or temporary

worker 18 19 18Urban residence 48 53 50

aKorean Won reported in units of 1,000. U.S. dollar equivalent, calculated using the 336day average exchange rate for 1996, is given in parenthesis (Oanda, 2000).

been in Western developed nations. Some interesting differences ex-ist, however, all of which suggest that cultural norms regarding alco-hol consumption may dominate the decision-making process in Korea.Income was a significant and positive factor in both the participationand consumption decision when U.S. expenditure data were used(Yen & Jensen, 1996) and in the participation decision when U.S. con-sumption data were used (Blaylock & Blisard, 1993a; Yen, 1995). Itslack of significance in the analysis of Korean data suggests that alco-hol consumption is not sensitive to a change in income. Thus, if reduc-tion of alcohol consumption becomes a national goal in Korea, all elsebeing equal, imposing a higher tax on alcohol is not likely to havemuch effect. Asset holdings (proxied as homeownership) were not asignificant factor for U.S. alcohol expenditures in Yen and Jensen(1996). However, it was a positive factor in the decision to consume


TABLE 2

Results of Binomial Probit and Truncated Regression for AlcoholConsumption

Probit(Participation decision)

Truncated regression(Consumption decision)

Household income 0.90E-05(0.664E-05)

0.74E-05(0.782E-05)

Household assets �0.12E-05(0.131E-05)

0.56E-06(0.144E-05)

Respondent age �0.02***(0.002)

0.01***(0.002)

Respondent married 0.02(0.056)

0.02(0.071)

Respondent male 1.18***(0.047)

1.23***(0.067)

Number of children aged 18 andunder in the household

0.01(0.024)

�0.03(0.029)

Education level of respondentmiddle school graduate

(reference category)high school graduate 0.10

(0.050)�0.17**

(0.062)college graduate 0.12*

(0.600)�0.34***

(0.071)Occupation of respondent

housewife (reference category)salaried worker 0.30***

(0.057)0.16

(0.086)self-employed worker 0.23***

(0.064)0.40***

(0.091)Occupation of respondent

farm & fishery worker 0.26**(0.089)

0.50***(0.114)

student, part-time, ortemporary worker

0.12*(0.061)

0.13(0.093)

Urban residence 0.05(0.037)

�0.06(0.044)

Constant �0.15(0.103)

0.86***(0.131)

�a

—1.08***

(0.017)log likelihood �3328.51*** �4314.579***N 6048 3102

aFor a technical explanation of the role of � in ML estimation, see Greene (1995).***p � .001.**p � .01.*p � .05.


alcohol in Yen (1995). Household asset holdings were not a significantfactor in either the participation or consumption decision in Korea.

In contrast to studies using U.S. data, the number of children aged18 and under, marital status and urban residence were not significantfactors in alcohol use and consumption levels in Korea. This findingmay imply that alcohol consumption is an activity rather evenly dis-tributed throughout the population, regardless of family compositionor residence. Consequently, this research provides no support for seg-menting the Korean population on the basis of family composition orresidence for either alcohol marketing or providing treatment pro-grams 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 signifi-cance of the coefficient on respondent’s age and respondent’s educa-tion differs across the participation and consumption equations. Ce-teris paribus, the probability of drinking was negatively related toage, however, the level of drinking increased with age for those whochose to drink. The probability of drinking increased for respondentswho were college graduates compared with those respondents whowere middle school graduates. However, the level of consumption ofalcohol decreased as educational level of respondent increased, sup-porting our initial hypothesis regarding the negative relationship be-tween the amount of drinking and the level of education. These find-ings suggest that education can play a role in Korean public policydesigned to reduce alcohol consumption.

Given the cultural norms in Korea, it is not surprising that genderdifferences in drinking behavior were found. Male respondents weremore likely to drink than female respondents were. Among those whochose to drink, male respondents were likely to drink more than fe-male respondents were. These results support our stated hypothesisregarding Korean culture and its restrictive norms on women drink-ing. Having gender be a significant factor in both the participationand consumption decisions was unique to Korea. Using U.S. data, Yenand Jensen (1996) found that being male was a significant factor inthe participation decision, but not the consumption decision. Con-versely, using Canadian data, Abdel-Ghany and Silver (1998) foundthat being male was significant in the consumption decision, but notthe participation decision. Interacting gender with various age cate-gories, Yen (1994) noted both participation and consumption in theU.S. were significantly higher for males aged 25–34 and 35–49 andsignificantly lower for females aged 64 and older. The use of interac-


tion terms, however, precludes a direct comparison with the results ofthis study.

The probability of the respondent drinking alcohol was significantlyhigher if their occupation was different from housewife. Since onlyKorean women would state “housewife” as an occupation, this findingfor occupation further underscored gender differences in the choice todrink alcohol or not. It is interesting that, among those who drink,the self-employed and the farm and fishery worker consumed signifi-cantly more than the housewife while the salaried worker and stu-dent or part-time or temporary worker did not. Further research onthe effect of occupation on alcohol consumption decisions might shedsome light on reasons for these differences. Comparison of results re-lated to occupation between this study and studies using Westerndata is difficult to make. Occupational categories may differ betweencountries. Occupation is both influenced by and, in turn, influences avariety of cultural factors that may be unique to a given location.Also, relatively few researchers using data from Western countriesconsidered the possible influence of occupation on decisions to drinkor how much to drink. Of those who did, Yen (1995) did not find it tobe a significant factor in analysis of the alcohol consumption decisionsof American women. Abdel-Ghany and Silver (1998) noted thatteachers in Canada were more likely than other occupations to drinkalcohol, however, they did not find occupation had a significant influ-ence on how much one chose to drink.

Considered as a whole, the findings of this research suggest that inKorea, as in Western developed nations, it is the young men withhigher levels of education who generally choose to drink. Unlike find-ings for Western nations, however, higher education appears to dis-courage relatively heavy consumption in Korea among those whochoose to drink. Whether the findings for gender reflect a cohort or alifecycle effect cannot be ascertained from cross-sectional data. It isinteresting, however, that despite long-standing liberalized attitudesregarding women drinking in Western cultures, gender difference inconsumption and participation persists. Since attitudes toward womendrinking in Korea are just now beginning to be challenged, it is likelythat gender differences in alcohol consumption decisions will persist forquite some time. Significant cultural change does not usually happenquickly.

In Korea, the decision to drink and the decision of how much toconsume did not appear to be affected by household economic re-sources, family composition, or residence. These findings stood in starkcontrast to those using data from Western countries where relatively


lower household income levels, presence of young children or a spouse,and rural residence generally discouraged either participation or con-sumption levels (Abdel-Ghany & Silver, 1998; Blaylock & Blisard, 1993a,1993b; Yen, 1994, 1995; Yen & Jensen, 1996). It may be that Koreanculture is more homogeneous than that of the U.S. or Canada. Or, thecultural norms regarding alcohol consumption may dominate the deci-sion making process. Whatever the reason for the differences betweenKorea and Western developed nations relative to alcohol consumptiondecisions, it is clear that targeted methods to market alcohol or to reachthose with alcohol-related problems cannot simply be exported from theWest to the Far East. At the same time, the Korean experience withdirect and indirect costs of excessive alcohol consumption does seem toshadow that of the West. It is fair to say that the health and social costsof excessive alcohol consumption transcend cultural differences. There-fore, Korea may need to develop methods of reaching its own at-riskpopulation that differ from methods used in Western cultures.

A recent issue regarding alcohol and Korea points to a direction forfuture research. In 1999, the nation of Korea came under severe criticismfrom the World Trade Organization (WTO) for the wide gap between taxrates imposed on imported and domestic alcohol. Imported whisky andbrandy faced tax rates of 100%, while imported vodka, rum, and gin weretaxed at 80%. The liquor tax on domestically produced soju was only35%. In addition to the liquor tax, Korea levies an “education tax” of 30%on imported and 10% on domestic spirits (European Business Commu-nity, 1999). These facts suggest that the Korean government has usedalcohol-related taxes both to raise revenues and to encourage purchase ofdomestic alcohol. It would be of interest to know what proportion ofKorean alcohol consumption is related to imported versus domesticspirits. If, as WTO sanctions propose, the tax on imported spirits isreduced, will consumption of alcohol in Korea increase overall or will theproportion of existing consumption simply change? Price data would benecessary to estimate consumer response to a change in tax rate. How-ever, the fact that income was not a significant factor in alcohol consump-tion decisions in this research provides at least indirect evidence thatKorean alcohol consumers are not price sensitive.

Summary

Findings of this research suggest that the Korean most likely topurchase alcoholic beverages is a young male with a college degree. Arelatively heavy drinker in Korea can be typified as a male who has a


middle school education and who is self-employed or works in farmingor fishery.

The results of this research underscore the importance of using atwo-step approach to alcohol consumption modeling. Parameter esti-mates of the double-hurdle model show that the effect of age, educa-tion level and occupation of the respondent was different in each deci-sion step. Thus, this approach provided more information than theTobit model would have provided regarding the unique role of eachvariable in the participation and consumption decisions. This addi-tional information may be valuable for understanding consumer be-havior in the alcoholic beverages market and for developing publicawareness programs. Given differences found in this analysis and an-alyses using data from Western nations, it is clear that Korea willneed to develop its own approach to segmenting the alcohol marketfor marketing or policy.

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