The Demand for Cigarettes: Advertising, the Health Scare, and the Cigarette Advertising Ban

Abstract

IN this paper I have esitimated the amount United States cigarette consumption has been affected by cigarette advertising and by the health scare over smoking. During 19531970 the health scare depressed cigarette consumption considerably more than cigarette advertising boosted it. Section I presents econometric estimations of the demand function for cigarettes, incorporating econometric corrections for multicollinearity. Section II gauges the comparative effects of advertising and the health scare. On these results, section III evaluates whether the recent Congressional ban of broadcast advertising of cigarettes will promote public health by reducing cigarette consumption. Although the advertising elasticity of demand was positive, it was quite small. More importantly, however, the ban also eliminated the health-scare-oriented antismoking commercials, which the Federal Communications Commission had forced broadcasters to air in proportion to cigarette commercials. Since the health scare has been the relatively stronger influence, the net effect of the ban may be to increase consumption, not decrease it. Ban advocates disregarded the interconnection of cigarette and antismoking commercials; the United States cigarette manufacturers apparently were not confused about the interconnection. Finally, the probable anti-competitive effects of the ban are noted in section IV.