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Alcohol advertising and alcohol consumption by adolescents

  • Henry Saffer
  • Dhaval Dave

This study investigates the effects of alcohol advertising on adolescent alcohol consumption. The theory of an industry response function and evidence from prior studies indicate the importance of maximizing the variance in advertising measures. Monitoring the Future (MTF) and National Longitudinal Survey of Youth 1997 (NLSY97) data are augmented with alcohol advertising, originating on the market level, for five media. The large sample of the MTF allows estimation of race and gender-specific models. The longitudinal nature of the NLSY97 allows controls for unobserved heterogeneity with state-level and individual fixed effects. Price and advertising effects are generally larger for females relative to males. Controls for individual heterogeneity yield larger advertising effects, implying that the MTF results may understate the effects of alcohol advertising. Results from the NLSY97 suggest that a 28% reduction in alcohol advertising would reduce adolescent monthly alcohol participation from 25% to between 24 and 21%. For binge participation, the reduction would be from 12% to between 11 and 8%. The past month price-participation elasticity is estimated at −0.26, consistent with prior studies. The results show that reduction of alcohol advertising can produce a modest decline in adolescent alcohol consumption, though effects may vary by race and gender. Copyright © 2006 John Wiley & Sons, Ltd.

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File URL: http://hdl.handle.net/10.1002/hec.1091
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Article provided by John Wiley & Sons, Ltd. in its journal Health Economics.

Volume (Year): 15 (2006)
Issue (Month): 6 ()
Pages: 617-637

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Handle: RePEc:wly:hlthec:v:15:y:2006:i:6:p:617-637
Contact details of provider: Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/5749

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  1. Henry Saffer & Frank J. Chaloupka, 1999. "Demographic Differentials in the Demand for Alcohol and Illicit Drugs," NBER Chapters, in: The Economic Analysis of Substance Use and Abuse: An Integration of Econometrics and Behavioral Economic Research, pages 187-212 National Bureau of Economic Research, Inc.
  2. Nelson, Jon P. & Young, Douglas J., 2001. "Do Advertising Bans Work? An International Comparison," Working Papers 6-01-1, Pennsylvania State University, Department of Economics.
  3. 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.
  4. 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.
  5. David Blake & Angelika Nied, 1997. "The demand for alcohol in the United Kingdom," Applied Economics, Taylor & Francis Journals, vol. 29(12), pages 1655-1672.
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  7. Young, Douglas J., 1993. "Alcohol advertising bans and alcohol abuse: Comment," Journal of Health Economics, Elsevier, vol. 12(2), pages 213-228, July.
  8. 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.
  9. Martyn Duffy, 2001. "Advertising in consumer allocation models: choice of functional form," Applied Economics, Taylor & Francis Journals, vol. 33(4), pages 437-456.
  10. Henry Saffer & Dhaval Dave, 2002. "Alcohol consumption and alcohol advertising bans," Applied Economics, Taylor & Francis Journals, vol. 34(11), pages 1325-1334.
  11. Frank J. Chaloupka & Henry Wechsler, 1996. "Binge Drinking In College: The Impact Of Price, Availability, And Alcohol Control Policies," Contemporary Economic Policy, Western Economic Association International, vol. 14(4), pages 112-124, October.
  12. Duffy, Martyn, 1995. "Advertising in demand systems for alcoholic drinks and tobacco: A comparative study," Journal of Policy Modeling, Elsevier, vol. 17(6), pages 557-577, December.
  13. 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.
  14. 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.
  15. Lariviere, Eric & Larue, Bruno & Chalfant, Jim, 2000. "Modeling the demand for alcoholic beverages and advertising specifications," Agricultural Economics of Agricultural Economists, International Association of Agricultural Economists, vol. 22(2), March.
  16. Jon P. Nelson, 1999. "Broadcast Advertising and U.S. Demand for Alcoholic Beverages," Southern Economic Journal, Southern Economic Association, vol. 65(4), pages 774-790, April.
  17. Dills, Angela K. & Jacobson, Mireille & Miron, Jeffrey A., 2005. "The effect of alcohol prohibition on alcohol consumption: evidence from drunkenness arrests," Economics Letters, Elsevier, vol. 86(2), pages 279-284, February.
  18. 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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