Vice Squad
Wednesday, November 19, 2003
Advertising Alcohol, and a Problem With Deregulating Commercial Speech

Friend of Vice Squad Dima Masterov passed along this story
concerning alcohol advertising in NBER Digest Online
. A recent
NBER working paper by Henry Saffer and Dhaval Dave finds that
underage drinking is responsive to advertising. (Vice advertisers
sometimes claim that they are fighting for market share, not
spurring overall demand.) An excerpt from the Digest story:

"The [Saffer and Dave] analysis 'suggests that the complete
elimination of alcohol advertising could reduce adolescent
monthly alcohol participation from about 25 percent to about
21 percent. For binge participation, the reduction might be from
about 12 percent to about 7 percent.' (Binge drinking is a term
defined by most researchers to mean the consumption of five or
more drinks at one occasion.) "

Vice advertising presents a tricky regulatory issue. Commercial
speech in the US currently does not receive the same level of
First Amendment protection as political speech. Some people,
including Supreme Court Justice Clarence Thomas, would like to
see the Constitutional protection of commercial speech enhanced.
I am not so sure -- even if all you care about is the protection of
commercial speech! The problem is as follows. The envisioned
enhancements for protection of commercial speech generally
would not apply to illegal products, such as heroin or marijuana.
If most restrictions on commercial speech are impermissible, then
legislatures will face only two options when it comes to vice
regulation: either the vice (think marijuana) can be made legal,
with advertising thereby virtually uncontrolled, or, marijuana can
be kept illegal, with no advertising allowed. (That is, intermediate
options, such as legal marijuana but a ban or severe restrictions
on advertising, would not be feasible.) I think that if the only two
options are as I indicated above, many legislatures will prefer to
keep marijuana illegal. As I object to the prohibition of vice backed
by criminal penalties, I think that this would be a pity. Further, the
intermediate option of legality plus advertising controls is often
a more desirable regulatory regime for vice than legality with
unrestricted advertising -- perhaps especially during a transition
away from a prohibition regime. For instance, British gambling
regulation has long followed this pattern -- do you know there
are (largely unadvertised) casinos in London? -- though now it
appears that British gambling will be further deregulated.

Vice Squad earlier looked at tobacco advertising bans.

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