Tobacco Advertising: Economic Theory and International Evidence

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 on smoking. 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. 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 tobacco advertising bans will have little of no effect. The regression results indicate that a comprehensive set of tobacco advertising bans can reduce consumption by 6.3 percent. The regression results also indicate that the new European Commission directive tobacco advertising in the EC countries, will reduce tobacco consumption by about 6.9 percent on average in the EC. The regression results also indicate that the ban on outdoor advertising included in the US tobacco industry state level settlement will probably not result in much change in advertising expenditures nor in tobacco use. Under the settlement industry would also contribute $1.5 billion over five years for public education on tobacco use. This counteradvertising could reduce tobacco use by about two percent.