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Did the Federal Trade Commission's Advertising Substantiation Program Promote More Credible Advertising?

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  • Sauer, Raymond D
  • Leffler, Keith B

Abstract

This paper examines the effects of the Federal Trade Commission's Advertising Substantiation Program, developed in the early 1970s. This program coupled changes in the legal definition of deception with more vigorous FTC enforcement. The authors analyze changes in advertising intensity, media choice, media wealth, and the progress of new entrants. The evidence suggests that adoption of substantiation requirements increased the credibility of advertising. Copyright 1990 by American Economic Association.

Suggested Citation

  • Sauer, Raymond D & Leffler, Keith B, 1990. "Did the Federal Trade Commission's Advertising Substantiation Program Promote More Credible Advertising?," American Economic Review, American Economic Association, vol. 80(1), pages 191-203, March.
    • Handle: RePEc:aea:aecrev:v:80:y:1990:i:1:p:191-203
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    Cited by:

    1. Salvatore Piccolo & Piero Tedeschi & Giovanni Ursino, 2018. "Deceptive Advertising with Rational Buyers," Management Science, INFORMS, vol. 64(3), pages 1291-1310, March.
    2. Glaeser, Edward L. & Ujhelyi, Gergely, 2010. "Regulating misinformation," Journal of Public Economics, Elsevier, vol. 94(3-4), pages 247-257, April.
    3. Jonathan Zinman & Eric Zitzewitz, 2016. "Wintertime for Deceptive Advertising?," American Economic Journal: Applied Economics, American Economic Association, vol. 8(1), pages 177-192, January.
    4. Kopalle, Praveen K. & Krishna, Aradhna & Rajan, Uday & Wang, Yu, 2022. "How does regulatory monitoring of cause marketing affect firm behavior and donations to charity?," International Journal of Research in Marketing, Elsevier, vol. 39(3), pages 947-966.
    5. Zeynep K. Hansen & Marc T. Law, 2008. "The Political Economy of Truth-in-Advertising Regulation during the Progressive Era," Journal of Law and Economics, University of Chicago Press, vol. 51(2), pages 251-269, May.
    6. Matthew Ryan & Rhema Vaithianathan, 2015. "The Regulation of Direct-to-Consumer Advertising of Pharmaceuticals in a Managed Care Setting," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 17(6), pages 986-1021, December.
    7. Kenneth S. Corts, 2013. "Prohibitions on False and Unsubstantiated Claims: Inducing the Acquisition and Revelation of Information through Competition Policy," Journal of Law and Economics, University of Chicago Press, vol. 56(2), pages 453-486.
    8. Thomas Mayer, 2012. "Ziliak and McClosky?s Criticisms of Significance Tests: A Damage Assessment," Working Papers 61, University of California, Davis, Department of Economics.
    9. Umit G. Gurun & Gregor Matvos & Amit Seru, 2016. "Advertising Expensive Mortgages," Journal of Finance, American Finance Association, vol. 71(5), pages 2371-2416, October.
    10. Thomas Mayer, 2012. "Ziliak and McClosky?s Criticisms of Significance Tests: A Damage Assessment," Working Papers 126, University of California, Davis, Department of Economics.
    11. Thomas Mayer, 2012. "Ziliak and McCloskey's Criticisms of Significance Tests: An Assessment," Econ Journal Watch, Econ Journal Watch, vol. 9(3), pages 256-297, September.
    12. Calel, Raphael & Dechezlepretre, Antoine & Venmans, Frank, 2023. "Policing carbon markets," LSE Research Online Documents on Economics 120565, London School of Economics and Political Science, LSE Library.
    13. Alexander, Cindy R, 1999. "On the Nature of the Reputational Penalty for Corporate Crime: Evidence," Journal of Law and Economics, University of Chicago Press, vol. 42(1), pages 489-526, April.
    14. Praveen K. Kopalle & Donald R. Lehmann, 2006. "Setting Quality Expectations When Entering a Market: What Should the Promise Be?," Marketing Science, INFORMS, vol. 25(1), pages 8-24, 01-02.

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