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Alcohol Advertising and Alcohol Consumption by Adolescents

  • Henry Saffer
  • Dhaval Dave

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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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
Date of revision:
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
Note: HE CH
Contact details of provider: Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
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  1. Henry Saffer, 1989. "Alcohol Advertising Bans and Alcohol Abuse: An International Perspective," NBER Working Papers 3052, National Bureau of Economic Research, Inc.
  2. 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.
  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. Henry Saffer & Dhaval Dave, 2002. "Alcohol consumption and alcohol advertising bans," Applied Economics, Taylor & Francis Journals, vol. 34(11), pages 1325-1334.
  5. 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.
  6. 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.
  7. 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.
  8. 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.
  9. Young, Douglas J., 1993. "Alcohol advertising bans and alcohol abuse: Comment," Journal of Health Economics, Elsevier, vol. 12(2), pages 213-228, July.
  10. Henry Saffer & Frank Chaloupka, 1998. "Demographic Differentials in the Demand for Alcohol and Illicit Drugs," NBER Working Papers 6432, National Bureau of Economic Research, Inc.
  11. 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.
  12. 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.
  13. 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.
  14. David Blake & Angelika Nied, 1997. "The demand for alcohol in the United Kingdom," Applied Economics, Taylor & Francis Journals, vol. 29(12), pages 1655-1672.
  15. 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.
  16. 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.
  17. Martyn Duffy, 2001. "Advertising in consumer allocation models: choice of functional form," Applied Economics, Taylor & Francis Journals, vol. 33(4), pages 437-456.
  18. 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.
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