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Alcohol Advertising and Motor Vehicle Fatalities

  • Henry Saffer

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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File URL: http://www.nber.org/papers/w4708.pdf
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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
Date of revision:
Publication status: published as Review of Economics and Statistics, Vol. 79, no. 3 (August 1997): 431-442.
Handle: RePEc:nbr:nberwo:4708
Note: HE
Contact details of provider: Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
Phone: 617-868-3900
Web page: http://www.nber.org
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  1. Saffer, Henry, 1993. "Alcohol advertising bans and alcohol abuse: Reply," Journal of Health Economics, Elsevier, vol. 12(2), pages 229-234, July.
  2. Henry Saffer, 1989. "Alcohol Advertising Bans and Alcohol Abuse: An International Perspective," NBER Working Papers 3052, National Bureau of Economic Research, Inc.
  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. 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.
  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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