Cigarette Advertising Regulation: A Meta-Analysis

Abstract

This paper presents a synthesis of cigarette advertising elasticities from econometric studies for the U.S. (25 studies) and other countries (13 studies). Summaries are presented for each sample using fixed- and random-effects weighted means and weighted regressions. The weighted regressions account for heteroscedasticity, non-homogeneity, independence, and random-effects associated with the underlying data-generating process. Elasticity values are categorized according to the time period(s) covered by the various studies, which controls for the effects of regulation. After accounting for random effects, the meta-analysis indicates that advertising elasticities are very small and not statistically significant regardless of the time period. The paper also reviews fifty years of regulation of cigarettes by the Federal Trade Commission. Using 19 U.S. studies, the paper conducts a meta-analysis of four important regulatory events: the 1953 health scare; 1964 Surgeon General's Report; 1967-1970 Fairness Doctrine; and the 1971 ban of broadcast advertising. The meta-analysis indicates a substantial decrease in cigarette consumption resulted from the 1964 Report and smaller impacts from the 1953 event and the Fairness Doctrine. The effect on consumption of the 1971 broadcast ban, which directly affected advertising, is not statistically significant. This result is consistent with the meta-analysis of advertising elasticities and indicates diminishing marginal returns to FTC regulation after 1965.

Keywords: Cigarette advertising, Federal Trade Commission, meta-analysis, regulation

JEL Classification: I18, H11, K32, M37