Cheers to the End of March! 🍻

You have had to endure 5 Mondays this month, which means you've earned a drink later today. At the very least, you've earned a newsletter about drinks.

What a month! It seemed like my newsletter on shipping containers and international trade was perfectly timed so that you can see why the ship blocking the Suez Canal is such a big deal. It’s not just impacting international shipping; it’s also making it difficult for villages along the Suez Canal that rely on ship traffic to support their communities. Hopefully, an end is in sight.

This week I want to talk about beer and the many ways it has found its way into my economics courses! This week I’ve invited a guest speaker to talk with my Economics of Crime course. Kirk is an anthropologist focusing on alcohol and has worked on some amazing projects. He will talk a bit about how US culture led to Prohibition and how society has been shaped after Prohibition was repealed. Last year, Kirk found himself invited to talk to my Natural Resource Economics class about his documentary, Land and Water Revisited. It explores how environmental changes have impacted the Teotihuacán Valley:

The other reason for dedicating this one to alcohol is that I came across a really interesting Conversation article about the role of women in brewing. I knew some of the alcohol-related anecdotes the article covered, like how beer was a cheap way to consume grain and that it provided nutrients to many of the working class. I hadn’t known that many of the earliest commercial brewers were women who had perfected their skills fermenting beer at home. A lot of the iconography of witches (pointy hat, cauldrons, black cats) was possibly associated with their roles as brewmasters.

As the Reformation took hold, European society began paying more attention to gender norms and witchcraft became punishable by death. Male brewers accused their female brewers of witchcraft and watched as their market share grew in response to women giving up their cauldrons for fear of being accused of potion brewing. Men have continued to dominate the beer industry, regardless of the brewery size. Unsurprisingly, it turns out that craft beer is perceived worse if people believe it was brewed by a woman. This bias can be seen in a variety of other products according to researchers at Stanford:

The presence of brewing continued into the 1700s as Adam Smith references the brewer to explain the concept of self-interest and the invisible hand. This concept is a critical opening component of many principles courses and references the situation in which no single authority needs to tell producers, even the brewers, exactly what to do in order to ensure that products are made for consumption:

“It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own self-interest. We address ourselves not to their humanity but to their self-love, and never talk to them of our own necessities, but of their advantages.”

While I introduce the quote and example in class, I often don’t talk about the brewer. I focus more on the baker and try to tie that into the Soviet breadlines of the 1900s. It’s also a good opportunity to share the coffee aisle clip from Moscow on the Hudson as well as my absolute favorite article about the time a Russian president visited a grocery store in Houston, TX toward the end of the USSR.

Beer comes up again in my principles course when I introduce examples of substitutes, but beer-related policies can also be used to discuss unintended consequences. This seems like a good time to tie this newsletter back to my guest speaker who will visit on Wednesday. The National Institute on Alcohol Abuse and Alcoholism has been tracking alcohol consumption since 1850. I’m curious if you have an expectation about whether you think Americans are consuming more or less today? I honestly didn’t have the slightest guess before looking at the data.

I could make a reasonable argument for either change. I could see how Americans might be consuming more because of the increased variety available as well as the general acceptance of alcohol in social settings after the end of Prohibition (more on that after the break). I could also see how Americans might be drinking less because clean water is more readily available or because we’re possibly a more health-conscious society today.

I was not prepared to see the data when I visualized it:

Let’s start with the obvious dip in the middle. The data is based on reported sales, so it assumes zero consumption during Prohibition. There is evidence that alcohol was still being consumed during this time through illegal sales, primarily spirits. The Spoetzl Brewery (brewers of my favorite beer) even admits that they continued brewing during Prohibition and relied on local residents to alert them if federal agents came to town. Prohibition decreased alcohol consumption after it was lifted, but peaked again in the 1980s. The unintended consequences of this policy are that it likely grew the power of organized crime thanks to bootlegging.

The second thing that I found interesting was the growth of consumption during the Cold War, but also the steep drop during (and after) the Civil War. Right before the start of the Civil War, Americans were consuming a little over 9 liters per person each year, but that fell by a third over the next twenty years. I would have assumed that experience would have led to even more drinking! These guys look like they could use a drink:

The last portion of the data that stood out was just how much Americans consumed in the way of spirits in the mid-1800s. And here was where Kirk French had helped clear things up when he first talked to my Crime course a couple of years ago. He was a little nervous talking about “the economics of alcohol” since he was an anthropologist. I assured him as long as he talked about whatever he was passionate about, I could eventually tie it back into what we covered. He shared why Americans consumed so much in distilled spirits in the 1800s and it couldn’t have fit more perfectly into our course and into economics as a whole.

To start the century, the British enacted trade restrictions with the US, objecting to its connection with slavery. One of the key areas they targeted was the American molasses and rum trade, which the federal government had started taxing in the 1790s. This is the Whiskey Rebellion you may have learned about in US History class. At the same time, the Corn Belt of the US had been settled and farmers were pumping out an enormous amount of corn. To avoid a wasted crop, farmers started distilling it. There was so much corn in those years that a gallon of whiskey sold for 25 cents. This was cheaper than any other beverage option, including beer, wine, coffee, tea, or milk. As the price of substitutes starts looking relatively more expensive, people consume more of the cheaper item. Eventually, the surplus of corn ran out and American farmers started growing more wheat, which is used to make beer, which saw a steady increase until Prohibition was enacted.

You may be wondering about the end of that data where beer and wine became much more popular with Americans. Or maybe you’re wondering about how international trade has impacted the beer industry? What about all those conglomerations and the merger of Anheuser-Busch InBev? Alcohol is a fascinating subject in and of itself, but I only have so much space in this newsletter before you stop reading. If you’d like to learn more about the role beer has shaped the world and how the world has shaped beer, I’d suggest Beeronomics: How Beer Explains the World.

If you’re just looking for more data on alcohol consumption around the world, check out Our World in Data. If you enjoy a cold beer every now and then and are interested in tracking your progress, add me on Untappd. If you need some new beer variety in your life, I signed up for Beer Drop in the middle of the pandemic and have loved it. It sends you a box of 6 beers from Colorado brewers and you can specify which styles you’d like in your box each month. If you sign up with this link, we both get $10 off our next shipment.

Facts and Figures You Didn’t Know You Wanted

  • In a sample of 2,536 craft breweries, Stanford researchers found that only 21% of breweries had at least one woman as founder/CEO or brewmaster [Craft Brewing Business]

  • There were an estimated 8,386 breweries in the United States in 2019. There were only 89 in 1978 [Brewer’s Association]

  • US Consumers age 21+ drank an average of 25.9 gallons of beer and cider per person during 2019 [National Beer Wholesalers Association]

  • Prohibition is estimated to have decreased alcohol consumption to approximately 30 percent of its pre-prohibition levels [Miron & Zweibel, 1991]

Reading Goals & Reading Progress

It’s Week 12 of 2021 and I’ve officially checked in 13 books. I finished a book on productivity as well as The Midnight Library. Over the weekend I started American Kingpin and have really loved it so far. It looks at the true story of the creator of the Silk Road.

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