Advertising and Price Effects on Adolescent Drinking

Summary of working paper 9676
Featured in print Digest

Doubling prices would reduce underage drinking by 28 percent and underage binge drinking by 51 percent.

Intensive advertising by the alcohol industry has such a strong influence on adolescents that its elimination would lower underage drinking in general and binge drinking in particular, according to a study by Henry Saffer and Dhaval Dave. In Alcohol Advertising and Alcohol Consumption by Adolescents (NBER Working Paper No. 9482), the authors also find that hefty price increases could have a similar effect.

While many public health advocates claim that advertising plays an important role in adolescent drinking, the alcoholic beverage industry has rejected the connection. Companies contend that their advertising is aimed at adults and is intended to influence brand choice, not the decision of whether or not to drink. But neither side has produced much in the way of objective data to either support or refute a link between advertising and underage drinking.

Saffer and Dave wade into the controversy by examining underage drinking between 1996 and 1998 as documented in two exhaustive, long-standing surveys of youth behavior: the University of Michigan's Monitoring the Future survey, which effectively samples some 63,000 high school students across the country; and the 1997 National Longitudinal Survey of Youth Behavior, which is undertaken by the federal Bureau of Labor Statistics. They compare data from these surveys to detailed reports on the prevalence of alcohol advertising in local markets during the same period, collected by Competitive Media Reporting, a well-regarded, independent research firm that mainly serves the advertising industry.

The economic analysis reveals that alcohol advertising - the majority of which is aimed at consumers of beer and liquor, not wine - "has a positive effect" on whether youth drink at all and on how much young people imbibe; that is, it encourages underage drinking. The relationship is especially pronounced for underage female drinkers.

Saffer and Dave do not claim that the alcohol industry has deliberately targeted young people. They simply report that regardless of intent, advertising appears to have influenced underage drinking habits. The analysis "suggests that the complete elimination of alcohol advertising could reduce adolescent monthly alcohol participation from about 25 percent to about 21 percent. For binge participation, the reduction might be from about 12 percent to about 7 percent." (Binge drinking is a term defined by most researchers to mean the consumption of five or more drinks at one occasion.)

Saffer and Dave go on to consider the effect of pricing on drinking behavior; they conclude that doubling prices would reduce underage drinking by 28 percent and underage binge drinking by 51 percent. "As a result, both advertising and price policies are shown to have the potential to substantially reduce adolescent alcohol participation," they state.

Saffer and Dave note that currently "both the level of alcohol consumption by adolescents and the level of alcohol advertising are considerable." They point to data from the Monitoring the Future survey showing that 7.7 percent of 8th graders, 21.9 percent of 10th graders, and 49.8 percent of 12th graders report having consumed alcohol in the past 30 days. Meanwhile, Competitive Media Reporting "estimated that alcohol producers spent about $1.5 billion" on ads in 2001, a 25 percent increase over 1998. Saffer and Dave point out that this figure is for "measured media" only and may account for as a little as a third of total promotional expenditures. It does not include spending on such things as event sponsorships, Internet sites, movie product placements, or point-of-purchase ads.

-- Matthew Davis