Love on the Rocks: Alcohol Abuse and Domestic Violence in Rural Mexico

What causes alcohol abuse and domestic violence and how can we stop them? These behaviors have multiple determinants, making the effects of changes in wife's and husband's income ambiguous. This paper estimates the effects of exogenous changes in wife's and husband's income on husband alcohol abuse and alcohol-induced violence using new data from rural Mexico. A long-lasting 20 dollar monthly increase in wife income decreases husbands' alcohol abuse by 15% and aggressive behavior by 21%; the extra money increase the wife's freedom and security, is spent on individual and household goods, and it crowds out transfers from the husband only for 5% of the wives whose income increases. Alcohol abuse and violence are insensitive to short-term fluctuations in husband's income. These findings suggest that the wife uses her higher income to reduce the consumption of goods that lower her utility, that alcohol abuse responds more to changes in permanent than in temporary income, and that targeting women as recipients of micro-credit or of other welfare programs may have beneficial effects in reducing alcohol dependence and domestic violence.