Advertising and Health: A Case Study of Menthol Cigarette Advertising and Cigarette Demand

Consumers make many decisions that affect their health, not only about medical care but about diet, physical activity, alcohol, and cigarettes. Some pharmaceuticals and many health-related consumer goods are heavily advertised. We explore the economics of the advertising of cigarettesa heavily advertised product which is consumed by 36.5 million adults and which is linked to more than 480,000 deaths each year in the United States. Unlike previous research on cigarette advertising, we distinguish menthol from nonmenthol advertising and we use an individual-level measure of advertising exposure. These data allow us to include rich controls for individual heterogeneity. We exploit quasi-experimental variation in advertising exposure created by sharply different supply-side variation in menthol and nonmenthol advertising. The combination of rich control variables and supply-side variation provides a credible identification strategy that addresses the potential endogeneity of advertising exposure. We find strong evidence that cigarette manufacturers target their menthol advertising at certain demographic groups. Failure to control for targeting yields misleading results. We examine multiple margins of cigarette demand and find little evidence that menthol advertising in magazines expands the size of the cigarette market. Our results contribute to important current public health policy debates about possible Food and Drug Administration regulation of the advertising of menthol cigarettes and similar tobacco products.