The Effect of Deceptive Advertising on Consumption of the Advertised Good and its Substitutes: The Case of Over-the-Counter Weight Loss Products
This paper is the first to estimate the impact of exposure to deceptive advertising on consumption of the advertised product and its substitutes. We study the market for over-the-counter (OTC) weight-loss products, a market in which deceptive advertising is rampant and products are generally ineffective with potentially serious side effects. We control for the targeting of ads using indicator variables for each unique magazine read and television show watched.
Our estimates indicate that exposure to deceptive advertising is associated with a lower probability that women, and a higher probability that men, consume OTC weight loss products. We find evidence of spillovers; exposure to deceptive print ads is associated with a higher probability of dieting and exercising for both men and women. We also find evidence that better-educated individuals are more sophisticated consumers of advertising and use it to make more health-promoting decisions.
This research was supported by an unrestricted educational grant to Cornell University from the Merck Company Foundation, the philanthropic arm of Merck & Co. We also thank Cornell's Institute for Health Economics, Health Behaviors, and Disparities for financial support. We thank Donald Kenkel, Dean Lillard, and Alan Mathios for their generosity in sharing the PhADS database. For helpful comments, we thank Sahara Byrne, Dhaval Dave, Phil DeCicca, Michael Grossman, Don Kenkel, Annabelle Krause, Jeff Niederdeppe, Edward Norton, Jeff Smith, and conference participants at the American Economic Association meetings, IZA Conference on the Economics of Risky Behaviors, and the Conference on the Economics of Obesity at the Paris School of Economics, and seminar participants at Yale, Cornell, University of Melbourne, University of Michigan, University of Minnesota, University of Pennsylvania, University of Sydney, University of York, McMaster, Case Western, Kenyon College, City University of New York Graduate Center, and the Federal Reserve Bank of Atlanta. Corresponding author: John Cawley. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.