Elsevier

Journal of Health Economics

Volume 19, Issue 6, November 2000, Pages 1117-1137
Journal of Health Economics

The effect of tobacco advertising bans on tobacco consumption

https://doi.org/10.1016/S0167-6296(00)00054-0Get rights and content

Abstract

Tobacco advertising is a public health issue if these activities increase smoking. Although public health advocates assert that tobacco advertising does increase smoking, there is significant empirical literature that finds little or no effect of tobacco advertising. In this paper, these prior studies are examined more closely with several important insights emerging from this analysis. This paper also provides new empirical evidence on the effect of tobacco advertising in 22 Organization for Economic Cooperation and Development (OECD) countries. The primary conclusion of this research is that a comprehensive set of tobacco advertising bans can reduce tobacco consumption and that a limited set of advertising bans will have little or no effect.

Introduction

The evidence implicating smoking in the deaths of millions of people is substantial and well documented. The Office on Smoking and Health (1994) estimates that in the US there are over 400,000 premature deaths per year due to smoking. Peto et al. (1994) estimate that in developed countries there are about 2 million premature deaths per year due to smoking. These include death from cancer, heart disease, strokes, and other causes. Smoking is also responsible for a considerable amount of illness including chronic lung disease and low birth weight.

Tobacco advertising is a public health issue if it increases smoking. Although public health advocates (for example Roemer, 1993) claim that tobacco advertising does increase smoking, there is a significant empirical literature that finds little or no effect of tobacco advertising on smoking (for example Hoek, 1999). This empirical literature on advertising provides the basis for the tobacco industry claim that its advertising only affects market share among various competing brands. In this paper, the methodologies used in prior studies of tobacco advertising are examined more closely and new empirical evidence on the effect of advertising bans on tobacco consumption is presented.

Section snippets

Advertising and consumption

Advertising is an important method of competition in industries that are highly concentrated, such as the cigarette industry. Firms in industries of this type tend not to compete by price, but try to increase sales with advertising and other marketing techniques. Since a number of prior studies have found little relationship between advertising and tobacco consumption, it is important to examine this literature before proceeding with a new empirical study. Economic theory provides some insights

Empirical analysis of advertising bans

One reason that the empirical results from prior studies of the effects of advertising bans are mixed is that the bans must be sufficiently inclusive to reduce the average product of the non-banned media. The studies by Hamilton (1975) and Laugesen and Meads (1991) suggest that this may not have been true in the past. However, since the late 1980s, a number of countries have enacted more comprehensive tobacco advertising bans. These changes provide an opportunity to reexamine the effects of

Conclusions

The primary conclusion of this research is that tobacco advertising increases tobacco consumption. The empirical evidence also shows that comprehensive advertising bans can reduce tobacco consumption, but that a limited set of advertising bans will have little or no effect. A limited set of advertising bans will not reduce the total level of advertising expenditure but will simply result in substitution to the remaining non-banned media. When more of the remaining media are eliminated, the

Acknowledgements

Funded by grant number R01 CA63458 from the National Cancer Institute. Helpful comments were provided by Michael Grossman, K. Michael Cummings and Kenneth Warner. Research assistance was provided by Dhaval Dave.

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