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Alcohol Advertising and Alcohol Consumption by Adolescents

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  • Henry Saffer
  • Dhaval Dave

Abstract

The purpose of this paper is to empirically estimate the effects of alcohol advertising on adolescent alcohol consumption. The theory of brand capital is used to explain the effects of advertising on consumption. The industry response function and the evidence from prior studies indicate that the empirical strategy should maximize the variance in the advertising data. The approach in this paper to maximizing the variance in advertising data is to employ cross sectional data. The Monitoring the Future (MTF) and the National Longitudinal Survey of Youth 1997 (NLSY97) data sets, which include only data for adolescents, are employed for the empirical work. These data sets are augmented with alcohol advertising data, originating on the market level, for five media. Use of both the MTF and the NLSY97 data sets improves the empirical analysis since each data set has its own unique advantages. The large size of the MTF makes it possible to estimate regressions with race and gender specific subsamples. The panel nature of the NLSY97 makes it possible to estimate individual fixed effects models. In addition, very similar models can be estimated with both data sets. Since the data sets are independent, the basically consistent findings increase the confidence in all the results. The results indicate that blacks participate in alcohol less than whites and their participation cannot be explained with the included variables as well as it can for whites. A comparison of male and female regressions shows that price and advertising effects are generally larger for females. Models which control for individual heterogeneity result in larger advertising effects implying that the MTF results may understate the effect of alcohol advertising. The results based on the NLSY97 suggest that a compete ban on all alcohol advertising could reduce adolescent monthly alcohol participation by about 24 percent and binge participation by about 42 percent. The past month price-participation elasticity was estimated at about -0.28 and the price-binge participation elasticity was estimated at about -0.51. Both advertising and price policies are shown to have the potential to substantially reduce adolescent alcohol consumption.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 9676.

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Date of creation: May 2003
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Publication status: published as Henry Saffer & Dhaval Dave, 2006. "Alcohol advertising and alcohol consumption by adolescents," Health Economics, John Wiley & Sons, Ltd., vol. 15(6), pages 617-637.
Handle: RePEc:nbr:nberwo:9676

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  1. Smith, Richard J & Blundell, Richard W, 1986. "An Exogeneity Test for a Simultaneous Equation Tobit Model with an Application to Labor Supply," Econometrica, Econometric Society, vol. 54(3), pages 679-85, May.
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  8. Henry Saffer, 2000. "Alcohol Consumption and Alcohol Advertising Bans," NBER Working Papers 7758, National Bureau of Economic Research, Inc.
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  10. Lariviere, Eric & Larue, Bruno & Chalfant, Jim, 2000. "Modeling the demand for alcoholic beverages and advertising specifications," Agricultural Economics, Blackwell, vol. 22(2), pages 147-162, March.
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  14. Becker, Gary S & Murphy, Kevin M, 1993. "A Simple Theory of Advertising as a Good or Bad," The Quarterly Journal of Economics, MIT Press, vol. 108(4), pages 941-64, November.
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Cited by:
  1. Niko De Silva & Benno Torgler, 2011. "Smoke Signals and Mixed Messages: Medical Marijuana & Drug Policy Signalling Effects," School of Economics and Finance Discussion Papers and Working Papers Series 272, School of Economics and Finance, Queensland University of Technology.
  2. Nelson, Jon P., 2014. "Binge Drinking, Alcohol Prices, And Alcohol Taxes," Working Papers 164652, American Association of Wine Economists.
  3. 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.
  4. PESTIEAU, Pierre & PONTHIERE, Grégory, . "Myopia, regrets, and risky behaviors," CORE Discussion Papers RP -2452, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  5. Henry Saffer & Frank Chaloupka, 1999. "Tobacco Advertising: Economic Theory and International Evidence," NBER Working Papers 6958, National Bureau of Economic Research, Inc.
  6. Shin-Yi Chou & Inas Rashad & Michael Grossman, 2005. "Fast-Food Restaurant Advertising on Television and Its Influence on Childhood Obesity," NBER Working Papers 11879, National Bureau of Economic Research, Inc.
  7. Dave, Dhaval & Saffer, Henry, 2013. "Demand for smokeless tobacco: Role of advertising," Journal of Health Economics, Elsevier, vol. 32(4), pages 682-697.
  8. 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).
  9. Henry Saffer & Dhaval Dave, 2002. "Alcohol consumption and alcohol advertising bans," Applied Economics, Taylor & Francis Journals, vol. 34(11), pages 1325-1334.
  10. Ligeon, Carel & Gregorowicz, Philip & Jolly, Curtis M., 2007. "Factors Influencing Alcohol Consumption In Caribbean And Latin American Countries," 2006 West Indies Agricultural Economics Conference, July 2006, San Juan, Puerto Rico 36956, Caribbean Agro-Economic Society.
  11. Zimmerman, Paul R. & Benson, Bruce L., 2007. "Alcohol and rape: An "economics-of-crime" perspective," International Review of Law and Economics, Elsevier, vol. 27(4), pages 442-473, December.
  12. Dave, Dhaval & Saffer, Henry, 2008. "Alcohol demand and risk preference," Journal of Economic Psychology, Elsevier, vol. 29(6), pages 810-831, December.
  13. Sen, Bisakha, 2009. "The relationship between frequency of family dinner and adolescent problem behaviors after adjusting for other family characteristics," MPRA Paper 24329, University Library of Munich, Germany.

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