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The Effect of Deceptive Advertising on Consumption of the Advertised Good and its Substitutes: The Case of Over-the-Counter Weight Loss Products

Author

Listed:
  • Cawley, John

    (Cornell University)

  • Avery, Rosemary

    (Cornell University)

  • Eisenberg, Matthew

    (Carnegie Mellon University)

Abstract

This paper is the first to estimate the impact of exposure to deceptive advertising on consumption of the advertised product and its substitutes. We study the market for over-the-counter (OTC) weight-loss products, a market in which deceptive advertising is rampant and products are generally ineffective with potentially serious side effects. We control for the targeting of ads using indicator variables for each unique magazine read and television show watched. Our estimates indicate that exposure to deceptive advertising is associated with a lower probability that women, and a higher probability that men, consume OTC weight loss products. We find evidence of spillovers; exposure to deceptive print ads is associated with a higher probability of dieting and exercising for both men and women. We also find evidence that better-educated individuals are more sophisticated consumers of advertising and use it to make more health-promoting decisions.

Suggested Citation

  • Cawley, John & Avery, Rosemary & Eisenberg, Matthew, 2013. "The Effect of Deceptive Advertising on Consumption of the Advertised Good and its Substitutes: The Case of Over-the-Counter Weight Loss Products," IZA Discussion Papers 7247, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp7247
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    Cited by:

    1. Andrew Rhodes & Chris M. Wilson, 2018. "False advertising," RAND Journal of Economics, RAND Corporation, vol. 49(2), pages 348-369, June.
    2. Goh, Choon Fu & Long, Chiau Ming & Humaira Fedelis, Nur Aisyah & Hamdan, Halimaton & Chuah, Soo Cheng & Yeo, Sook Fern & Tan, Cheng Ling & Wong, Tin Wui, 2023. "Critical insights of nano-based pharmaceutical, cosmeceutical and nutraceutical products: Empirical evidence from the consumption values perspective," Journal of Retailing and Consumer Services, Elsevier, vol. 72(C).
    3. Daniel W. Elfenbein & Raymond Fisman & Brian McManus, 2019. "Does Cheap Talk Affect Market Outcomes? Evidence from eBay," American Economic Journal: Applied Economics, American Economic Association, vol. 11(4), pages 305-326, October.
    4. Xinyao Kong & Anita Rao, 2021. "Do “Made in USA” Claims Matter?," Marketing Science, INFORMS, vol. 40(4), pages 731-764, July.
    5. Gupta, Aastha, 2023. "Deceptive advertising, regulation and naive consumers," International Journal of Industrial Organization, Elsevier, vol. 91(C).

    More about this item

    Keywords

    advertising; weight loss; obesity; deception; information; drugs; health;
    All these keywords.

    JEL classification:

    • I1 - Health, Education, and Welfare - - Health
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • M37 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Advertising
    • M38 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Government Policy and Regulation
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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