Cigarette and Tobacco Consumption: Have Anti-Smoking Policies Made a Difference?

The consumption of cigarette and tobacco products in Australia is modelled using the rational addiction theory of Becker and Murphy, augmented by data on advertising, regulatory intervention, and demographic factors. Over the past 35 years, price (including tobacco taxes), real income, and demographic effects explain most of the variation in tobacco consumption. Advertising by tobacco companies has had a relatively small direct effect on consumption. Work-place smoking bans and health warnings on cigarette packs have had a relatively minor impact, while anti-smoking advertising and bans on electronic media advertising have had no detectable direct effect.     

State monopolies and alcoholic beverage consumption

Fifteen states have state monopolies to regulate the retail distribution of distilled spirits or wine. One objective of state ownership is the reduction of consumption. However, previous research supports both no effect and a negative effect of state monopoly (control) states on consumption.Using improved data on prices, this paper provides a mixture of classical and Bayesian estimates of beverage-specific demand functions. The analysis is carried out at the state level for the year 1982. Independent variables include the real own-price, substitute prices, income, tourism activity, religious sentiment, youth proxy, and several regulatory measures including monopoly control, bans on price advertising, minimum legal drinking age, and restrictions on the number and type of retail outlets.The results indicate no direct effect of monopoly control on consumption that is separate from effects manifested by higher prices or, for beer, limited outlets. Furthermore, average prices are not significantly greater in the monopoly states. Several possible explanations are advanced to explain these results, including the likelihood that the higher transaction costs in the monopoly states are a tax on consumption of alcohol.     

DOES ADVERTISING MATTER? ESTIMATING THE IMPACT OF CIGARETTE ADVERTISING ON SMOKING AMONG YOUTH IN DEVELOPING COUNTRIES

The goal of this paper is to evaluate the impact of cigarette advertising on smoking among youth in developing countries. Using micro‐level data from 19 developing countries, we examine the structural relationship between smoking behavior and advertising exposure and the reduced‐form relationship between smoking and advertising bans. Instrumental variables are used to address the endogeneity of advertising exposure. Country‐specific unobserved heterogeneity is further reduced by controlling for measures of antismoking sentiment and cigarette prices. After accounting for the endogeneity of advertising, we find that the positive correlation between smoking and advertising exposure in our sample can be largely explained by the disproportionately higher propensity of smokers to observe advertising rather than a direct causal effect of advertising on smoking. (JEL I12, I18)     

ADVERTISING RESTRICTIONS, COMPETITION, AND ALCOHOL CONSUMPTION

Distilled spirits producers recently voted to eliminate their voluntary ban on broadcast advertising. The ban received public support because of the high social cost associated with alcohol consumption and the belief that advertising promotes alcohol consumption and abuse. In spite of this belief, the empirical evidence indicates that advertising has no significant effect on the market demand for distilled spirits. This evidence has led many policy economists to conclude that eliminating the ban will have no effect on alcohol consumption. The purpose of this research is to show that this conclusion is incorrect because it ignores the fact that advertising restrictions may affect industry competition as well as market demand.     

Advertising and US alcoholic beverage demand: system-wide estimates

The effects of advertising on consumption of alcoholic beverages in the US are analysed. The goal is to obtain evidence on the importance of advertising at the level of beverage demand(beer, wine, spirits) and for total consumption of alcohol (per capita gallons of ethanol). A three-equation conditional demand system is estimated that includes own- and cros-beverage advertising as explanatory variables. Four models of the differential demand system are estimated, including the Rotterdam, AID, CBS, and NBR models, using annual US data for the period 1964-90 on beverage consumption, prices, expednitures, and real advertising. Estimates are obtained of the complete matrix of own- and cross-elascities for each beverage’ price and advertising. At the beverage level, the results indicate a positive butr very small effect of advertising on beverage consumption, with most of the impact due to wine advertising and non due to beer advertising. There is no efect of advertising in the composite demand function for alcohol. Hence, the results from system-wide modelling suggest that alcohol advertising serves to reallocate brand sales, with no effect on total ethanol consumption and very small effects on beverage consumption.     

Regulating misinformation

Governments have responded to misleading advertising by banning it, engaging in counter-advertising and taxing and regulating the product. In this paper, we consider the welfare effects of those different responses to misinformation. While misinformation lowers consumer surplus, its effect on social welfare is ambiguous. Misleading advertising leads to over-consumption but that may be offsetting the underconsumption associated with oligopoly outputs. If all advertising is misinformation then a tax or quantity restriction on advertising maximizes welfare, and other policy interventions are inferior. If firms undertake quality improving investments that are complementary to misinformation, then combining taxes or bans on misleading advertising with other policies can increase welfare.     

广告支出与消费增长:基于1981年～2009年时间序列数据的经验研究

理论分析显示广告支出与消费增长相互依存,广告可以通过诱导消费者的潜在需求从而刺激消费,消费增长也会促使企业增加广告支出。笔者在多变量VAR模型的基础上,采用中国1981年～2009年度数据,运用协整检验发现:广告支出、城市居民消费支出和农村居民消费支出之间存在某种长期均衡关系,广告支出是城市和农村消费增长的格兰杰原因。脉冲响应和方差分解表明,广告对消费的刺激效应不断下降,呈现出长期均衡的趋势。从宏观整体的视角来看,企业广告长期投放应保持理性,广告支出应维持在相对稳定合理的状态。     

THE IMPACT OF PRICES AND CONTROL POLICIES ON CIGARETTE SMOKING AMONG COLLEGE STUDENTS

Smoking among youths and young adults rose throughout the 1990s. Numerous policies were enacted to try to reverse this trend. However, little is known about the impact these policies have on the smoking behavior of young adults. This article uses a dichotomous indicator of daily smoking participation in the past 30 days, an ordered measure representing the frequency of cigarette consumption, and a quasi-continuous measure of the number of cigarettes smoked per day on average to examine the impact of cigarette prices, clean indoor air laws, and campus-level smoking policies on the smoking behaviors of a 1997 cross section of college students. The results of the analysis indicate that higher cigarette prices are associated with lower smoking participation and lower levels of use among college student smokers. Local- and state-level clean indoor air restrictions have a cumulative impact on the level of smoking by current smokers. Complete smoking bans on college campuses are associated with lower levels of smoking among current smokers but have no significant impact on smoking participation. Bans on cigarette advertising on campus as well as bans on the sale of cigarettes on campus have no significant effect on the smoking behavior of college students.     

The US National Tobacco Settlement: the effects of advertising and price changes on cigarette consumption

This paper provides an econometric analysis of the effects of cigarette price and advertising changes stemming from the United States Tobacco Settlement of 1998. This is done by estimation of a demand function for cigarettes, based on data from both before and after the Settlement. The model is estimated using monthly time series data for the period 1990–2000. Results show that the increase in cigarette prices stemming from the Settlement reduced per capita cigarette consumption in the USA by 8.3%. However, the cigarette companies also increased advertising in the years immediately preceding and following the Settlement. This study estimates that this increased advertising partially offsets the effects of the higher prices, increasing cigarette consumption by 2.7 to 4.7%, and hence blunting the effects of the price increase by 33–57%.     

Much ado about nothing? Smoking bans and Germany's hospitality industry

Over the past years, public smoking bans have been introduced in most European countries. Unlike elsewhere, in Germany such bans were introduced at state level at different points in time, which provides important intra-country regional variation that can be exploited to identify the effects of such bans on the hospitality industry. Using monthly data from a compulsory survey carried out by the German Federal Statistical Office, we study the short-run effects that these bans had on establishments’ sales. In contrast to the largely US-based literature, we find that smoke-free policies had a negative (yet moderate) effect on establishment sales. Closure rates of businesses in the hospitality industry, however, were not significantly affected by the introduction of state smoking bans.     

Examining an Alcohol consumption Kuznets Curve for developed countries

In this paper we expand the Simon Kuznets´ (1955) hypothesis to an ‘Alcohol consumption Kuznets curve’, showing that as income rise, further resources become available to buy more alcohol. Hence, people consume more alcohol and alcohol consumption rates increase. Nevertheless, as income rises, individual health becomes a more recognized point of interest and people decrease their alcohol consumption levels in order to increase their health status. For a selection of OECD countries, we find empirical evidence that alcohol consumption is influenced by income, inequality, unemployment rates, life expectancy and therefore the business cycle. Moreover, the demographic structure (ageing and youth ratio) does not affect the alcohol consumption level.     

Legal access to alcohol and automobile accidents: Potential interactive effects of alcohol and drug consumption

The combination of drugged and drunk driving is an important policy topic as some states and countries have liberalized prohibitions on substance use to varying degrees. In this study, we analyze the effect of legal access to alcohol on suspected drug impaired accidents. We find that accidents with suspected drug impairment significantly increase when a driver gains legal access to alcohol at age 21. Our findings suggest that even if alcohol and drug consumption are substitutes, as much of the literature suggests, potential interactive effects may offset the reduction in decreased alcohol consumption from drugs.     

COMMENT—ALCOHOL ADVERTISING IN MAGAZINES AND YOUTH READERSHIP: ARE YOUTHS DISPROPORTIONATELY EXPOSED?

This article investigates the relationship between alcohol advertising in magazines and youth readership, while controlling for a set of magazine and readership variables related to the demand for advertising space. It reconstructs and reanalyzes a data set including count data for alcohol ads placed in 28 magazines in 2001-2003 that was the basis for a previous study, which concluded that alcohol advertisers do not target youths. We address the problem of collinearity in that data set and add an explanatory variable to explicitly model the hypothesis that alcohol advertising is preferentially directed to a young adult audience. We find that the number of alcohol advertisements in magazines increases significantly with the proportion of youth readers, even after controlling for young adult readership. Our results indicate that youths are disproportionately exposed to alcohol advertising and that reducing youth exposure to alcohol advertising remains an important public policy concern. ( JEL L82, L66, M37)     

Alcohol availability and alcohol-related motor vehicle accidents

The impact of alcohol availability on alcohol-related motor vehicle accidents centres on the sensitivity of consumption to changes in the full price of alcohol – the dollar price of alcohol plus the time and travel costs associated with acquiring alcohol. Reducing the number of licensed alcohol vendors raises the time and travel costs of alcohol; if alcohol consumption is responsive to this price increase, then drinking and driving may decrease. Using data on the 254 counties in the US state of Texas, the results in this paper show that alcohol availability has a significant impact on alcohol-related motor vehicle accidents. Thus, alcohol vendor restrictions can be an important policy tool in reducing such accidents.     

The stability of cigarette demand

The relative effects of various governmental interventions upon cigarette consumption is important to policy-makers. Historically, the demand for cigarettes has been quite unstable. Previous studies employ fixed parameter models and use dummy variables associated with interventions to stabilize the demand function. In contrast, we use a varying parameter model aplied to data from the United States for 1953–84 to investigate the stability of demand and show that the demand function is stabilized when dummy variables are employed. Our results suggest that industry advertising increases aggregate consumption while government interventions decrease it. However, the marginal effect of government warnings seems to be small, at least in the US: while the effect of the 1964 health warning is statistically significant, the effect of the 1979 health warning is not.     

Another look at the identical tastes hypothesis on the analysis of cross-country alcohol data

A number of studies have appeared in the area of cross-country consumption comparisons, where a common system of demand equations is used to model the consumption patterns of all countries. Under this approach, tastes are taken to be the same internationally. Such an assumption of identical tastes was forcibly advocated by the dual Nobel laureates, Stigler and Becker, who argued that tastes neither change capriciously nor differ importantly between people. In this paper, we use the system-wide approach to demand analysis to analyse the alcohol consumption patterns of drinkers from 10 high-income industrialised countries and verify Stigler and Becker’s (Rev Econ Statist 59:113–118, 1977) hypothesis by testing whether pooling the data across countries is acceptable. We also present the implied demand elasticities for beer, wine and spirits for the 10 countries and discuss the use of these elasticities in policy-related applications.     

ALCOHOL REGULATION AND DOMESTIC VIOLENCE TOWARDS CHILDREN

In recent years, economists have paid much attention to the demand for alcohol and the negative externalities associated with excessive drinking. Largely ignored in the literature is the link between alcohol use and domestic violence. Given the established positive relationship between alcohol consumption and acts of violence, the purpose of this paper is to examine the role that changes in the determinants of the demand for alcohol may play in reducing the incidence of violence aimed at children. Data on violence come from the 1976 Physical Violence in American Families survey. We estimate a model in which violent outcomes are affected by the state excise tax rate on beer; illegal drug prices, and other regulatory variables such as availability measures and laws restricting the advertising of alcohol. Results show that increasing the tax on beer can be an effective policy tool in reducing violence. Laws designed to make obtaining beer more difficult also may be effective in reducing violence, while restrictions on advertising and increases in illegal drug prices have no effects.     

Does advertising increase labour supply? Time series evidence from the UK

Wages in industrialized countries have risen considerably during the last 50 years, whereas hours worked, for manual workers at least, have decreased only marginally. In Europe, one policy response has been to attempt to protect workers from pressure to work long hours by placing legal restrictions on the amount of hours that may be worked each week. This paper examines the possibility that, in fact, observed hours may be the result of a desire of workers to work longer due to a shift in their preferences from leisure to increased consumption, caused by the huge increase in mass media advertising. A cointegrating VAR framework is used to test this hypothesis on UK time series data for both males and females from 1952 to 1997. Advertising is shown to be positively associated with hours worked for both male and female series. Causality tests indicate unidirectional causality, for males and females, from advertising to hours worked. These results suggest that the European policy response is more likely to restrict employee rather than employer discretion over hours.     

Advertising in consumer allocation models: choice of functional form

This study investigates the empirical performance of four different functional forms for advertising-augmented consumer allocation models. The investigation is carried out within the context of the UK alcoholic drinks markets. The aims of the study are twofold: (i) to assess which of the four functional forms provides the best explanation of the data and may serve, therefore, as the most suitable framework for investigating advertising effects in these markets; and (ii) to consider whether the findings with regard to advertising effects are robust and consistent across model specifications. Advertising is found to have had no significant effect upon the ‘product composition’ or ‘level’ of total alcoholic drink consumption in the UK over the period from 1964 to 1996, and this result is robust with respect to variations in the specification of functional form. The consumption of alcoholic drink is affected by relative prices, total consumer budgeted expenditures and, to some extent, by autonomous shifts in tastes. The balance of the evidence from tests for functional form appeared to favour the Almost Ideal Demand system as a framework for investigating the influence of advertising and other factors on drink consumption.     

Subjective mortality expectations and consumption and saving behaviours among the elderly

Abstract Life expectancy is an important factor that individuals have to take into account for saving and consumption choices. The life‐cycle model of consumption and saving behaviour predicts that consumption growth should decrease with higher mortality rates. The aim of this study is to test this hypothesis based on data about subjective longevity expectations from the Health and Retirement Study merged with detailed consumption data from two waves of the Consumption and Activities Mail Survey. This study finds that an increase in subjective mortality by 1% corresponds to an annual decrease in consumption of non‐durable goods of around 1.8%.