QotD: Teenage Spending

Richer teenagers spend more money on everything, including booze, fags and weed. Yet this is not purely an effect of extra spending power. The source of the money counts too. A teenager who earns an extra $1,000 through a job is 1.1 per cent more likely to smoke and 1.6 per cent more likely to drink and 0.6 per cent more likely to use marijuana. But when the same sum comes from pocket money, the effects are more than five times greater: a teenager with an extra $1,000 annual allowance is 6.2 per cent more likely to smoke, 9.6 per cent more like to drink and 4.5 per cent more likely to use marijuana.

It is not clear whether this difference is because part-time workers have less time to indulge, whether they come from different backgrounds (some effort is made in the research to allow for this) or whether there is a difference in character between the workers and the pocket-money scroungers. Still, the conclusion is clear enough: cut off pocket money for teenagers and lower the minimum wage at once. It's the only way to keep our teenagers living clean lives.

Tim Harford, "The Undercover Economist: Round numbers", FT.com, 2006-09-22