Peer-Pressure and Rational Underage Binge-Drinking

Abstract

This paper provides a utility-based definition of binge-drinking and examines the compatibility of this phenomenon with a rational decision making. Prohibition of young people’s consumption of alcohol is frequently violated by binge-drinking in groups. The analysis considers the roles of peer-pressure, full price of alcohol and crowding in underage group-drinking sessions and identifies the conditions for binge-drinking by expected utility maximizing members. Rational binge-drinking occurs when the impact of the peer-pressure on the individual member’s utility exceeds the loss of utility from the forgone spending on all other goods associated with the expected full marginal cost of consuming alcohol.