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Alcohol Advertising and Motor Vehicle Fatalities

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  • Henry Saffer

Abstract

The purpose of this paper is to empirically estimate the effect of alcohol advertising on motor vehicle fatalities. The concept of an industry level advertising response function is developed and other empirical issues in estimating the effects of advertising are reviewed. The data set consists of quarterly observations, from 1986 to 1989, for 75 advertising markets in the United States and includes 1200 observations. Since motor vehicle fatalities and alcohol advertising are jointly determined, Two Stage Least Squares is used in the estimation. Reduced form fatality models and advertising models are also estimated to predict the effect of changes in the price of advertising. The regression results show that alcohol advertising has a significant and positive effect on motor vehicle fatalities. The data and regression results are used to estimate the effects of two policy options. The first option is to ban all broadcast alcohol advertising. The data indicate that if a ban on broadcast alcohol advertising did not also include bans on other types of alcohol marketing, the effect on motor vehicle fatalities might be in the range of 2000 to 3000 lives saved per year. The second policy is the elimination of the tax deductibility of alcohol advertising. This policy could reduce alcohol advertising by about 27 percent, reduce motor vehicle fatalities by about 2300 deaths per year and raise about $336 million a year in new tax revenue.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 4708.

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Date of creation: Apr 1994
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Publication status: published as Review of Economics and Statistics, Vol. 79, no. 3 (August 1997): 431-442.
Handle: RePEc:nbr:nberwo:4708

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  1. Walsh, Brendan M, 1982. "The Demand for Alcohol in the UK: A Comment," Journal of Industrial Economics, Wiley Blackwell, vol. 30(4), pages 439-46, June.
  2. Saffer, Henry, 1993. "Alcohol advertising bans and alcohol abuse: Reply," Journal of Health Economics, Elsevier, vol. 12(2), pages 229-234, July.
  3. Young, Douglas J., 1993. "Alcohol advertising bans and alcohol abuse: Comment," Journal of Health Economics, Elsevier, vol. 12(2), pages 213-228, July.
  4. Henry G. Grabowski, 1976. "The Effects of Advertising on the Interindustry Distribution of Demand," NBER Chapters, in: Explorations in Economic Research, Volume 3, number 1, pages 21-75 National Bureau of Economic Research, Inc.
  5. Henry Saffer, 1989. "Alcohol Advertising Bans and Alcohol Abuse: An International Perspective," NBER Working Papers 3052, National Bureau of Economic Research, Inc.
  6. Ornstein, Stanley I & Hanssens, Dominique M, 1985. " Alcohol Control Laws and the Consumption of Distilled Spirits and Beer," Journal of Consumer Research, University of Chicago Press, vol. 12(2), pages 200-213, September.
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Cited by:
  1. Shin-Yi Chou & Inas Rashad & Michael Grossman, 2008. "Fast-Food Restaurant Advertising on Television and Its Influence on Childhood Obesity," Journal of Law and Economics, University of Chicago Press, vol. 51(4), pages 599-618, November.
  2. Daniel Albalate, 2006. "Lowering blood alcohol content levels to save lives: The european experience," Working Papers, Xarxa de Referència en Economia Aplicada (XREAP) CREAP20006-07, Xarxa de Referència en Economia Aplicada (XREAP), revised Dec 2006.
  3. Beth A. Freeborn & Brian McManus, 2010. "Substance Abuse Treatment and Motor Vehicle Fatalities," Southern Economic Journal, Southern Economic Association, vol. 76(4), pages 1032-1048, April.
  4. Nelson, Jon P., 2001. "Alcohol Advertising and Advertising Bans: A Survey of Research Methods, Results, and Policy Implications," Working Papers 7-01-2, Pennsylvania State University, Department of Economics.
  5. Mullins, Michelle & Milyo, Jeffrey & Sykuta, Michael E., 2006. "Regulating for Public Health: Motivations for and Efficacy of State Alcohol Regulations," 2006 Annual meeting, July 23-26, Long Beach, CA 21176, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  6. Daniel Albalate, 2007. "Lowering blood alcohol content levels to save lives: A European case study," Working Papers in Economics 173, Universitat de Barcelona. Espai de Recerca en Economia.
  7. Deodhar, Satish Y. & Fletcher, Stanley M., 1998. "Dynamic Effects Of Peanut Butter Advertising On Peanut Butter Demand," Faculty Series 16702, University of Georgia, Department of Agricultural and Applied Economics.

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