decline of the microbrews, and other adventures in economics theses
a decade of explosive growth, production and sales of American microbrewed
beer leveled off in the late 1990s. In his senior thesis, “Growth
in the Microbrewery Market,” economics and computer science
major Nikolay Dakov ’02 showed why.
Dakov began with the assumption that microbrewers’ premium
prices and relatively small size (Anheuser-Busch sells nearly as
much beer in a week as the 10 largest microbrewers combined sell
in a year) make them sensitive to market forces that don’t
affect mass producers. But proving his case was difficult: In the
microbrewing industry, sales data, like recipes, are treated as
trade secrets. The 10 largest microbrewers did, however, agree to
give Dakov state-by-state lists of their distributors. This gave
him an indirect measure of demand for their product, which he used
as a proxy for the microbrew market. Dakov found that what he thought
were the three most likely suspects behind the slowdown—market
saturation, the economic downturn, and overinvestment in company
expansion—were insignificant. Instead, something far more
worrying to the brewers appears to be at work: a major demographic
Craft beer, it turns out, is primarily the nectar of the middle-aged.
“They’re the only ones who can afford it. And older
people drink wine,” Dakov explains. In the late 1990s, the
largest cohort of middle-aged people in U.S. history—the baby
boomers—started to become the nation’s largest-ever
group of retirees. The very people whose rise to economic and social
dominance in the 1980s had fueled the growth of the craft beer industry
are now, apparently, forsaking their bottle openers for corkscrews.
The larger microbrewers—Sam Adams, Sierra Nevada, and Red
Hook are the top three—have recognized this shift, Dakov says,
and are beginning to target a younger audience in their advertising.
All three have requested a copy of Dakov’s thesis.
’02 looked at the link between religious faith and financial
prudence in her senior economics thesis, “Religion and Savings.”
Mining demographic data contained in the University of Michigan’s
mammoth Health and Retirement study, Anderson found that to a statistically
significant degree, the faithful invest more of their income and
are less likely to be in debt than the non-faithful. They also retire
wealthier and bequeath more to their offspring.
As Anderson points out, one of the few early studies of this issue
was Max Weber’s hugely influential The Protestant Ethic
and the Spirit of Capitalism (1904), which related Protestant
moral virtues of temperance, modesty, and hard work to the explosive
growth of the German entrepreneurial middle class in the 17th and
18th centuries. But Anderson suggests that the modern relationship
between religiosity and savings is even simpler: “Religions
are future-oriented,” she writes, in that they stress responsibility
for one’s behavior and the virtue of forging a good life for
oneself and one’s children. Economically speaking, that outlook
translates into a personal pattern of deferred spending and sober
In his senior thesis, “The Effect of Thinness on American
Wage Markets,” Tony Beirne, Jr. ’02 gave a long-standing
truism another look. Several studies have famously shown that for
a given job the obese earn significantly less than employees of
lower weight. Marked on a graph comparing wage to weight, the trend
line looks something like a wedge: a slow, steady upward slope indicating
wages increasing with weight, followed by a sharp downward turn
where obesity begins to detract from earnings.
It is an overly simplistic model, long criticized for lacking a
cohesive logic. (Why is the break between “obese” and
“non-obese” so sharp? And why are the relatively skinny
paid less than the moderately heavy?) Beirne’s analysis, based
on income and body mass data from the ongoing National Longitudinal
Survey of Youth, paints a more nuanced picture. In it, the trend
line looks like a rounded mesa, with wages dropping at both ends—the
extremes of low and high weight—and with a more or less level
section of higher wages near the middle.
The implication is that deviation from a perceived “norm”
of weight, and not obesity per se, is what gets punished in wage
markets. The very thin, like the very heavy, are underpaid—vigorous
signals from the fashion world notwithstanding.
1997, when the U.S. Food and Drug Administration loosened restrictions
on advertising for antidepressants, the use of those medications
has risen 172 percent. And the drug companies’ expenditures
on advertising antidepressants have doubled, now topping $250 million
annually. To Shannon Finnegan ’02, that coincidence begged
a question: Has aggressive marketing pushed antidepressant use beyond
the level at which responsible medical care would keep it? She addressed
the issue in her senior thesis, “The Effects of Direct-to-Consumer
Advertising on the Antidepressant Market.”
Finnegan looked at a wide range of information: drug companies’
marketing plans (including rebates to insurers), patterns of antidepressant
sales, even the nuts and bolts of depression treatment. Many psychiatrists,
she reports, now feel that advertising has undermined the objectivity
of the doctor-patient relationship by creating among patients unrealistic
expectations for drug treatment. Meanwhile, patient advocacy groups
complain that cheaper—and no less effective—treatments
are being displaced. Perhaps more telling, says Finnegan, is the
fact that some older drugs are now being renamed and promoted as
new treatments for psychological ailments unrelated to depression.
Finnegan takes pains to avoid a blanket condemnation of antidepressant
marketing. But she stands by her question: Does America need to
be a Prozac nation?
is now a software developer for Tritech Solutions, in Boston. Claire
Anderson has returned to her hometown, Chicago, where she is seeking
work as an economic analyst. Tony Beirne is an underwriter at Liberty
Mutual in Portsmouth, New Hampshire. Shannon Finnegan is a research
analyst at Cambridge Finance Partners in Cambridge, Massachusetts.
Photo by Jason Wallengren