This is a question I get a lot from those of my clients who like to take a look at the ingredients label of the products they use. They sometimes get tripped up because they'll see something with alcohol in the name and assume it's bad for their skin. But not all alcohols are created equal. There are different types of alcohols and they have very different effects on your skin.
There are two main types of alcohols we'll be talking about--simple alcohols and fatty alcohols. Simple alcohols are ingredients like ethanol, denatured alcohol, ethyl alcohol, methanol, benzyl alcohol, isopropyl alcohol, and SD alcohol. These can be used as a solvent, astringent, to enhance absorption (of both good and bad ingredients), as a preservative, or to buffer the pH of a product. These alcohols are extremely harsh on the skin, and can disrupt the skin's natural barrier function, which is crucial to having healthy skin. You see these alcohols a ton in drug store products, particularly in drug store astringents and toners, which are often very high in alcohol.
The good alcohols are the fatty alcohols. These are formed when fats and oils are chemically reduced. They can be used as an emollient to help product spread and to help prevent water loss in the skin and can also be used to help cleanse the skin. For most people, these alcohols will be perfectly fine for their skin and will help to increase the health and hydration of their skin. There are some studies that on very sensitive people these can still be an irritant, but for anyone who is sensitive we always recommend they patch test products before they start using them.
The main fatty alcohols we see in skin care are cetyl alcohol, which is derived from coconut oil and can be used as a stabilizer and emollient; stearyl alochol, which is also derived from coconut oil and can be used as an emollient and emulsifier; and cetearyl alcohol, which is an emulsifying wax that can help to thin and soften very thick formulas.
Hopefully this information about alcohol in skin care will help you to be a better label reader and understand the ingredients that you are putting on your skin better!