Promoting Wellness or Waste? Evidence from Antidepressant Advertising
46 Pages Posted: 6 Mar 2018 Last revised: 14 Aug 2018
Date Written: July 31, 2018
Direct-to-Consumer Advertising (DTCA) of prescription drugs is controversial. Even if drugs are efficacious, advertising may inappropriately select patients into treatment. Leveraging advertising variation driven by the borders of television markets, this paper provides the first quasi-experimental measurement of the effect of DTCA on an ex-post measure of consumer well-being. In particular, DTCA of antidepressants significantly decreases missed days of work, a primary outcome associated with depression. Back-of-the-envelope calculations suggest that the wage benefit of a 10% increase in advertising is about $770 million per year while the total cost of the corresponding advertising-marginal prescriptions is about $32 million.
Keywords: Advertising, DTCA, Labor Supply, Health, Selection
JEL Classification: M31, M37, M38, H23, I11, I12, I18, L51, J22, J24, M54
Suggested Citation: Suggested Citation