The impact of tobacco advertising bans on consumption in developing countries

https://doi.org/10.1016/j.jhealeco.2008.02.010Get rights and content

Abstract

Tobacco advertising bans have become commonplace in developed nations but are less prevalent in developing countries. The importance of advertising bans as part of comprehensive tobacco control strategies has been emphasised by the Framework Convention on Tobacco Control which calls for comprehensive bans on tobacco advertising. The empirical literature suggests that comprehensive advertising bans have played a role in reducing consumption in developed countries but that limited policies have not. This paper extends this analysis to include 30 developing countries and finds that bans do play an important role in reducing tobacco consumption in these countries. It finds that both comprehensive as well as limited policies are effective in reducing consumption although comprehensive bans have a far greater impact than limited ones. Furthermore, it finds that advertising bans may be even more effective in the developing world than they are in the developed world.

Introduction

Possibly the single most important event in the history of tobacco control occurred in 1964 when the United States Surgeon General warned of the proven causal relationship between cigarette smoking and smoking related diseases, particularly lung cancer (United States Department of Health and Welfare, 1964, in Laugesen and Meads, 1991). This encouraged a wave of regulation and legislation in the developed world as governments began to restrict the advertising and promotion of cigarettes, place warnings of the dangers of smoking on packaging and increase prices using taxation (Laugesen and Meads, 1991). It is now generally accepted that smoking, as well as passive smoking, is a significant cause of premature death (United States Department of Health and Human Services, 1989, in Laugesen and Meads, 1991). More and more governments are finding it necessary to strengthen the regulation of advertising and in many cases banning it altogether. This is in line with the obligations and commitments contained in the Framework Convention on Tobacco Control which recognizes that a “comprehensive ban on advertising, promotion and sponsorship would reduce the consumption of tobacco products” (World Health Organisation, 2003/2005, p. 11). Furthermore it calls upon all ratifying nations to implement comprehensive bans on advertising. This has seen an increase in the number of developing countries taking steps to restrict and ban the advertising of tobacco products.

By 2030, tobacco is expected to be the single biggest cause of death worldwide. By 2020, 70% of those killed by smoking will be in the developing world (Jha and Chaloupka, 1999). It is becoming important and necessary to understand which interventions succeed in reducing tobacco consumption, especially in the context of developing countries. Although the main driving force behind tobacco control is within the realm of public health it is economic interventions that have been found to be the most successful in reducing tobacco consumption. These interventions have tended to be related to increases in the price of cigarettes through taxation although a larger set of regulations including advertising bans, public smoking bans and restrictive sales practices are now becoming increasingly popular. Thus it is important to assess the effectiveness of these policies to ensure that the best possible policies are put in place to reduce cigarette consumption in developing countries.

This paper attempts to consider the impact that advertising bans have on tobacco consumption, paying particular attention to developing countries. It does so by using a cross-country analysis of demand including 51 countries. The first part considers the prior literature while the second section focuses on the methodology and data. This is followed by an analysis of the data and the estimation of the demand models.

Section snippets

Literature review

The debate over whether or not advertising affects the consumption of tobacco has for a long time been controversial. Tobacco control advocates and practitioners argue that tobacco advertising has a positive impact on aggregate consumption and that restricting and even banning tobacco advertising altogether can reduce aggregate consumption. The tobacco industry have for a long period of time argued that advertising has no positive impact on aggregate consumption but rather that it influences

Methodology and data

The dataset has been drawn from a number of sources. Price data is sourced from the Economist Intelligence Unit's World Cost of Living Survey (the largest dataset which includes a significant number of developing countries which collects annual data consistently on the retail prices of cigarettes). Data is collected on a city-wide basis for two different brands, an international or imported brand (usually Marlboro) and a locally produced popular brand, in two different types of retail stores.

Data analysis

The level of regulation in each country and year were measured according to the methodology designed by Saffer and Chaloupka (2000) by classifying the level of regulation in each country in each particular year as being weak, limited or comprehensive. The Saffer and Chaloupka method considers the regulation in seven types of media: television, radio, outdoor (including billboards), print (including magazines, books, newspapers), cinema, point of sale and sponsorships. If bans exist in none, one

Econometric model

A static fixed effects model is estimated employing country effects only and then employing both country and time effects. The country specific fixed effects model only controls for country specific differences and is called a one-way model. The two-way model includes both country and time effects and controls for differences across countries as well as differences between time periods. 51 countries are included in the model over 14 years (1990–2003). The panel is not balanced since

Discussion and conclusion

The principle question asked in this paper is what impact do advertising bans have on tobacco consumption. Secondary to that is what impact they have specifically in the context of developing countries. This paper has attempted to estimate cross-country demand models to quantify the impact of limited and comprehensive advertising bans on consumption controlling for changing prices and incomes. The static models show that comprehensive bans have a significant negative impact on consumption in

Acknowledgments

The author would like to thank Corné van Walbeek, Reza Daniels and two anonymous referees for useful comments and suggestions and Angela McClean and Omar Shafey for providing data. The author would like to acknowledge the financial support of Economic Research Southern Africa. All errors and omissions remain the author's alone.

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