Persistence of cigarette advertising across media and smoking rates

Abstract

This article uses state-level US panel data to examine the effects of cigarette advertising on smoking. We disaggregate cigarette advertising into (1) print, (2) outdoor, (3) entertainment and (4) store. How does advertising persist over time across advertising media? Are there differences in effectiveness of advertising across different smoking rates? Results show that the price elasticity of cigarette demand is negative and within the range of recent estimates, whereas border price elasticities and income elasticities are positive. All elasticities, however, are uniquely sensitive to smoking rates, as is the effectiveness of the Master Settlement Agreement. Current aggregate advertising increases cigarette demand, whereas accompanying negative advertising takes hold in the third year. Upon disaggregation, current store advertising increases smoking in most cases. However, store advertising has a negative effect by the third year, especially in states with smoking rates at or above the median. Other advertising media have weak or no effects.