Bradley Shapiro

Estimating the Value of Offsite Tracking Data to Advertisers: Evidence from Meta
Date Posted:Tue, 06 Aug 2024 11:40:54 -0500
Third-party cookies and related ?offsite? tracking technologies are frequently used to share user data across applications in support of ad delivery. These data are viewed as highly valuable for online advertisers, but their usage faces increasing headwinds. In this paper, we quantify the benefit to advertisers from using such offsite tracking data in their ad delivery. With this goal in mind, we conduct a large-scale, randomized experiment that includes more than 70,000 advertisers on Facebook and Instagram. We first estimate advertising effectiveness at baseline across our broad sample. We then estimate the change in effectiveness of the same campaigns were advertisers to lose the ability to optimize ad delivery with offsite data. In each of these cases, we use recently developed deconvolution techniques to flexibly estimate the underlying distribution of effects. We find a median cost per incremental customer at baseline of $38.16 that under the median loss in effectiveness would rise to $49.93, a 31% increase. Further, we find ads targeted using offsite data generate more long-term customers per dollar than those without, and losing offsite data disproportionately hurts small scale advertisers. Taken together, our results suggest that offsite data bring large benefits to a wide range of advertisers.

Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at Preferences for Firearms
Date Posted:Thu, 16 Nov 2023 18:18:13 -0600
This paper provides a critical input into crafting effective firearms policy: an understanding of consumer demand for guns. We estimate individual-level price sensitivity and substitution patterns across gun types using stated choice experiments. We find that potential firearm buyers are price insensitive overall, but that first-time handgun buyers are the most price sensitive. We also estimate considerable substitution from semi-automatic long guns to handguns, which are associated with more crimes per gun. This finding suggests that firearm restrictions specifically targeting semi-automatic long guns would have minimal impact on gun ownership.

Preferences for Firearms and Their Implications for Regulation
Date Posted:Mon, 13 Feb 2023 06:25:52 -0600
This paper estimates consumer demand for firearms with the aim of predicting the likely impacts of firearm regulations on the number and types of guns in circulation. We first conduct a stated-choice-based conjoint analysis and estimate an individual-level demand model for firearms. We validate our estimates using aggregate moments from observational data. Next, we use our estimates to simulate changes in the number and types of guns in circulation under alternative regulations. Importantly, we find that bans or restrictions that specifically target ?assault weapons? increase demand for handguns, which are associated with the vast majority of firearm-related violence. We provide distributions of consumer surplus under counterfactuals and discuss how those distributions could be useful for crafting policy.

Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

Preferences for Firearms and Their Implications for Regulation
Date Posted:Fri, 26 Aug 2022 15:47:31 -0500
This paper estimates consumer demand for firearms with the aim of predicting the likely impacts of firearm regulations on the number and types of guns in circulation. We first conduct a stated-choice-based conjoint analysis and estimate an individual-level demand model for firearms. We validate our estimates using aggregate moments from observational data. Next, we use our estimates to simulate changes in the number and types of guns in circulation under alternative regulations. Importantly, we find that bans or restrictions that specifically target ?assault weapons? increase demand for handguns, which are associated with the vast majority of firearm-related violence. We provide distributions of consumer surplus under counterfactuals and discuss how those distributions could be useful for crafting policy.

Preferences for Firearms and Their Implications for Regulation
Date Posted:Wed, 24 Aug 2022 15:12:36 -0500
This paper estimates consumer demand for firearms with the aim of evaluating the likely impacts of firearm regulations. We first conduct a stated-choice-based conjoint analysis and estimate an individual-level demand model for firearms. We validate our estimates using aggregate moments from observational data. Next, we use our estimates to simulate changes in the number and types of guns in circulation under alternative regulations. Importantly, we find that bans or restrictions that specifically target 'assault weapons' increase demand for handguns, which are associated with the vast majority of firearm-related violence. We provide distributions of consumer surplus under counterfactuals and discuss how those distributions could be useful for crafting policy.

Estimating the Value of Offsite Data to Advertisers on Meta
Date Posted:Wed, 24 Aug 2022 15:10:35 -0500
We study the extent to which advertisers benefit from data that are shared across applications. These types of data are viewed as highly valuable for digital advertisers today. Meanwhile, product changes and privacy regulation threaten the ability of advertisers to use such data. We focus on one of the most common ways advertisers use offsite data and run a large-scale study with hundreds of thousands of advertisers on Meta. Within campaigns, we experimentally estimate both the effectiveness of advertising under business as usual, which uses offsite data, as well as how that would change under a loss of offsite data. Using recently developed deconvolution techniques, we flexibly estimate the underlying distribution of treatment effects across our sample. We find a median cost per incremental customer using business as usual targeting techniques of $43.88 that under the median loss in effectiveness would rise to $60.19, a 37% increase. Similarly, analyzing purchasing behavior six months after our experiment, ads delivered with offsite data generate substantially more long-term customers per dollar, with a comparable delta in costs. Further, there is evidence that small scale advertisers and those in CPG, Retail, and E-commerce are especially affected. Taken together, our results suggest a substantial benefit of offsite data across a wide range of advertisers, an important input into policy in this space.

New: Preferences for Firearms and Their Implications for Regulation
Date Posted:Wed, 24 Aug 2022 06:19:53 -0500
This paper estimates consumer demand for firearms with the aim of evaluating the likely impacts of firearm regulations. We first conduct a stated-choice-based conjoint analysis and estimate an individual-level demand model for firearms. We validate our estimates using aggregate moments from observational data. Next, we use our estimates to simulate changes in the number and types of guns in circulation under alternative regulations. Importantly, we find that bans or restrictions that specifically target 'assault weapons' increase demand for handguns, which are associated with the vast majority of firearm-related violence. We provide distributions of consumer surplus under counterfactuals and discuss how those distributions could be useful for crafting policy.

New: Estimating the Value of Offsite Data to Advertisers on Meta
Date Posted:Wed, 24 Aug 2022 06:17:54 -0500
We study the extent to which advertisers benefit from data that are shared across applications. These types of data are viewed as highly valuable for digital advertisers today. Meanwhile, product changes and privacy regulation threaten the ability of advertisers to use such data. We focus on one of the most common ways advertisers use offsite data and run a large-scale study with hundreds of thousands of advertisers on Meta. Within campaigns, we experimentally estimate both the effectiveness of advertising under business as usual, which uses offsite data, as well as how that would change under a loss of offsite data. Using recently developed deconvolution techniques, we flexibly estimate the underlying distribution of treatment effects across our sample. We find a median cost per incremental customer using business as usual targeting techniques of $43.88 that under the median loss in effectiveness would rise to $60.19, a 37% increase. Similarly, analyzing purchasing behavior six ...

Estimating the Value of Offsite Tracking Data to Advertisers: Evidence from Meta
Date Posted:Thu, 04 Aug 2022 21:03:38 -0500
Third-party cookies and related `offsite' tracking technologies are frequently used to share user data across applications in support of ad delivery. These data are viewed as highly valuable for online advertisers, but their usage faces increasing headwinds. In this paper, we quantify the benefit to advertisers from using such offsite tracking data in their ad delivery. With this goal in mind, we conduct a large-scale, randomized experiment that includes more than 70,000 advertisers on Facebook and Instagram. We first estimate advertising effectiveness at baseline across our broad sample. We then estimate the change in effectiveness of the same campaigns were advertisers to lose the ability to optimize ad delivery with offsite data. In each of these cases, we use recently developed deconvolution techniques to flexibly estimate the underlying distribution of effects. We find a median cost per incremental customer at baseline of $38.16 that under the median loss in effectiveness would rise to $49.93, a 31% increase. Further, we find ads targeted using offsite data generate more long-term customers per dollar than those without, and losing offsite data disproportionately hurts small scale advertisers. Taken together, our results suggest that offsite data bring large benefits to a wide range of advertisers.

New: Estimating the Value of Offsite Data to Advertisers on Meta
Date Posted:Thu, 04 Aug 2022 12:10:55 -0500
We study the extent to which advertisers benefit from data that are shared across applications. These types of data are viewed as highly valuable for digital advertisers today. Meanwhile, product changes and privacy regulation threaten the ability of advertisers to use such data. We focus on one of the most common ways advertisers use offsite data and run a large-scale study with hundreds of thousands of advertisers on Meta. Within campaigns, we experimentally estimate both the effectiveness of advertising under business as usual, which uses offsite data, as well as how that would change under a loss of offsite data. Using recently developed deconvolution techniques, we flexibly estimate the underlying distribution of treatment effects across our sample. We find a median cost per incremental customer using business as usual targeting techniques of $43.88 that under the median loss in effectiveness would rise to $60.19, a 37% increase. Similarly, analyzing purchasing behavior six ...

Depression and Shopping Behavior
Date Posted:Thu, 09 Dec 2021 13:50:53 -0600
Using a large survey that connects shopping behavior with health information, we document correlations between self-reported depression and the size and composition of shopping baskets. We find that 16% of individuals suffer from depression and over 30% of households have at least one member with depression. Households with depression exhibit striking differences in shopping behavior: they spend less, shop less at grocery stores and more at convenience stores, and spend proportionally less on fresh produce and alcohol but more on tobacco. They spend similarly on unhealthy foods. These correlations hold within counties, suggesting that they are not driven by region-specific demographics or preferences that are correlated with depression. However, we rule out differences in shopping within households as they change depression status. Using the take-up of antidepressants as an event, we document little change in shopping after treatment. We discuss takeaways regarding the economic impact of depression and decision modeling.

Depression and Shopping Behavior
Date Posted:Wed, 01 Dec 2021 02:07:45 -0600
Using a large survey panel that connects household shopping behavior with individual health information, this paper documents correlations between self reported depression and the size and composition of shopping baskets. First, we find that roughly 16% of individuals report suffering from depression and over 30% of households have at least one member who reports suffering from depression. Households with a member suffering from depression exhibit striking differences in shopping behavior: they spend less overall, visit grocery stores less and convenience stores more frequently and spend a smaller share of their baskets on fresh produce and alcohol but a larger share on tobacco. They spend similar shares on unhealthy foods like cakes, candy, and salty snacks. These cross-sectional correlations hold within counties, suggesting that they are not driven by region specific demographics or preferences that are incidentally correlated with depression status. They also hold when considering only single-member households. However, we rule out large differences in shopping behavior within households as they change depression status. Further, using the take-up of antidepressants as an event, we document little change in shopping in response to treatment. With our results, we discuss takeaways for the economic impact of depression and for decision modeling.

New: Depression and Shopping Behavior
Date Posted:Tue, 30 Nov 2021 16:13:45 -0600
Using a large survey panel that connects household shopping behavior with individual health information, this paper documents correlations between self reported depression and the size and composition of shopping baskets. First, we find that roughly 16% of individuals report suffering from depression and over 30% of households have at least one member who reports suffering from depression. Households with a member suffering from depression exhibit striking differences in shopping behavior: they spend less overall, visit grocery stores less and convenience stores more frequently and spend a smaller share of their baskets on fresh produce and alcohol but a larger share on tobacco. They spend similar shares on unhealthy foods like cakes, candy, and salty snacks. These cross-sectional correlations hold within counties, suggesting that they are not driven by region specific demographics or preferences that are incidentally correlated with depression status. They also hold when considering ...

Depression and Shopping Behavior
Date Posted:Mon, 08 Nov 2021 11:06:24 -0600
Using a large survey panel that connects household shopping behavior with individual health information, this paper documents correlations between self reported depression and the size and composition of shopping baskets. First, we find that roughly 16% of individuals report suffering from depression and over 30% of households have at least one member who reports suffering from depression. Households with a member suffering from depression exhibit striking differences in shopping behavior: they spend less overall, visit grocery stores less and convenience stores more frequently and spend a smaller share of their baskets on fresh produce and alcohol but a larger share on tobacco. They spend similar shares on unhealthy foods like cakes, candy, and salty snacks. These cross-sectional correlations hold within counties, suggesting that they are not driven by region specific demographics or preferences that are incidentally correlated with depression status. They also hold when considering only single-member households. However, we rule out large differences in shopping behavior within households as they change depression status. Further, using the take-up of antidepressants as an event, we document little change in shopping in response to treatment. With our results, we discuss takeaways for the economic impact of depression and for decision modeling.

REVISION: Depression and Shopping Behavior
Date Posted:Mon, 01 Nov 2021 19:01:05 -0500
Using a large survey panel that connects household shopping behavior with individual health information, this paper documents correlations between self reported depression and the size and composition of shopping baskets. First, we fnd that roughly 16% of individuals report suffering from depression and over 30% of households have at least one member who reports suffering from depression. Households with a member suffering from depression exhibit striking differences in shopping behavior: they spend less overall, visit grocery stores less and convenience stores more frequently and spend a smaller share of their baskets on fresh produce and alcohol but a larger share on tobacco. They spend similar shares on unhealthy foods like cakes, candy, and salty snacks. These cross-sectional correlations hold within counties, suggesting that they are not driven by region specifc demographics or preferences that are incidentally correlated with depression status. They also hold when considering ...

Depression and Shopping Behavior
Date Posted:Thu, 07 Oct 2021 15:08:09 -0500
Using a large survey panel that connects household shopping behavior with individual health information, this paper documents correlations between self reported depression and the size and composition of shopping baskets. First, we fnd that roughly 16% of individuals report suffering from depression and over 30% of households have at least one member who reports suffering from depression. Households with a member suffering from depression exhibit striking differences in shopping behavior: they spend less overall, visit grocery stores less and convenience stores more frequently and spend a smaller share of their baskets on fresh produce and alcohol but a larger share on tobacco. They spend similar shares on unhealthy foods like cakes, candy, and salty snacks. These cross-sectional correlations hold within counties, suggesting that they are not driven by region specifc demographics or preferences that are incidentally correlated with depression status. They also hold when considering only single-member households. However, we rule out large differences in shopping behavior within households as they change depression status throughout the sample. Further, using the take-up of antidepressant drugs as an event, we document little change in shopping in response to treatment. With our results, we discuss the takeaways for the economic impact of depression as well as for decision modeling.

REVISION: Depression and Shopping Behavior
Date Posted:Thu, 07 Oct 2021 06:13:30 -0500
Using a large survey panel that connects household shopping behavior with individual health information, this paper documents correlations between self reported depression and the size and composition of shopping baskets. First, we find that roughly 16% of individuals report suffering from depression and over 30% of households have at least one member who reports suffering from depression. Households with a member suffering from depression exhibit striking differences in shopping behavior: they spend less overall, visit grocery stores less and convenience stores more frequently and spend a smaller share of their baskets on fresh produce and alcohol but a larger share on tobacco. They spend similar shares on unhealthy foods like cakes, candy, and salty snacks. These cross-sectional correlations hold within counties, suggesting that they are not driven by region specific demographics or preferences that are incidentally correlated with depression status. They also hold when considering ...

Research Note: Procedure for Building Nielsen Ad Intel Data and Merging with Nielsen RMS Scanner Data
Date Posted:Thu, 18 Feb 2021 15:38:42 -0600
In this document, we detail how to construct the Nielsen Ad Intel Database from the raw source files
provided by the Kilts Center for Marketing at the University of Chicago Booth School of Business.
Further, we detail our procedure for matching the Ad Intel data with the retail scanner data (RMS),
as we do in Shapiro et al. (2020).

REVISION: TV Advertising Effectiveness and Profitability: Generalizable Results from 288 Brands
Date Posted:Wed, 10 Feb 2021 12:00:28 -0600
We estimate the distribution of television advertising elasticities and the distribution of the advertising return on investment (ROI) for a large number of products in many categories. Our results reveal substantially smaller advertising elasticities compared to the results documented in the literature, as well as a sizable percentage of statistically insignificant or negative estimates. The results are robust to functional form assumptions and are not driven by insufficient statistical power or measurement error. The ROI analysis shows negative ROIs at the margin for more than 80% of brands, implying over-investment in advertising by most firms. While the overall ROI of the observed advertising schedule is only positive for one third of all brands, statistical uncertainty provides the possibility that advertising may be valuable for a larger number of brands if advertising is reduced at the margin.

REVISION: How and When to Use the Political Cycle to Identify Advertising Effects
Date Posted:Mon, 23 Nov 2020 10:35:33 -0600
A central challenge in estimating the causal effect of TV advertising on demand is isolating quasi-random variation in advertising. Political advertising, which topped $14 billion in expenditures in 2016, has been proposed as a plausible source of such variation and thus a candidate for an instrumental variable. We provide a critical evaluation of how and where this instrument is valid and useful across categories. We characterize the conditions under which political cycles theoretically identify the causal effect of TV advertising on demand, highlight threats to the exclusion restriction and monotonicity condition, and suggest a specification to address the most serious concerns. We test the strength of the first stage category-by-category for 274 product categories. For most categories, weak-instrument robust inference is recommended, as first-stage F-statistics are less than 10 for at least 221 of 274 product categories in our benchmark specification. The largest first-stage ...

Generalizable and Robust TV Advertising Effects
Date Posted:Mon, 17 Aug 2020 12:00:09 -0500
We provide generalizable and robust results on the causal sales effect of TV advertising for a large number of products in many categories. Such generalizable results provide a prior distribution that can improve the advertising decisions made by firms and the analysis and recommendations of policy makers. To provide generalizable results, we base our analysis on a large number of products and clearly lay out the research protocol used to select the products. We characterize the distribution of all estimates, irrespective of sign, size, or statistical significance. To ensure generalizability, we document the robustness of the estimates. First, we examine the sensitivity of the results to the assumptions made when constructing the data used in estimation. Second, we document whether the estimated effects are sensitive to the identification strategies that we use to claim causality based on observational data. Our results reveal substantially smaller advertising elasticities compared to the results documented in the extant literature, as well as a sizable percentage of statistically insignificant or negative estimates. Finally, we conduct an analysis of return on investment (ROI). While our results show that many brands perform better with their observed advertising than they would without advertising, we document considerable over-investment in advertising at the margin.

REVISION: Valuing Brand Collaboration: Evidence From a Natural Experiment
Date Posted:Mon, 17 Aug 2020 03:53:07 -0500
We study complementarities between brands in the context of collaborations across museums. Over the course of our sample, one major museum with a highly recognized brand closed temporarily and sequentially collaborated with two established local museums. With individual panel data on museum memberships around these events, we measure how collaborations affect demand using an empirical framework of complementarities that are newly applied to the branding context. We observe two counter-acting demand patterns. First, customers with no history of buying membership from either museum enter the market, suggesting brand complementarities. Second, a sub-group of customers who previously purchased from either or both of the museums display decreased demand, consistent with brand dilution. Any structural approach that models the demand for collaboration with existing preferences for separate brands fails to create accurate demand predictions. The magnitude of the offsetting forces varies ...

REVISION: Generalizable and Robust TV Advertising Effects
Date Posted:Fri, 07 Aug 2020 03:23:18 -0500
We provide generalizable and robust results on the causal sales effect of TV advertising for a large number of products in many categories. Such generalizable results provide a prior distribution that can improve the advertising decisions made by firms and the analysis and recommendations of policy makers. To provide generalizable results, we base our analysis on a large number of products and clearly lay out the research protocol used to select the products. We characterize the distribution of all estimates, irrespective of sign, size, or statistical significance. To ensure generalizability, we document the robustness of the estimates. First, we examine the sensitivity of the results to the assumptions made when constructing the data used in estimation. Second, we document whether the estimated effects are sensitive to the identification strategies that we use to claim causality based on observational data. Our results reveal substantially smaller advertising elasticities compared ...

REVISION: Generalizable and Robust TV Advertising Effects
Date Posted:Thu, 06 Aug 2020 04:09:42 -0500
We provide generalizable and robust results on the causal sales effect of TV advertising for a large number of products in many categories. Such generalizable results provide a prior distribution that can improve the advertising decisions made by firms and the analysis and recommendations of policy makers. To provide generalizable results, we base our analysis on a large number of products and clearly lay out the research protocol used to select the products. We characterize the distribution of all estimates, irrespective of sign, size, or statistical significance. To ensure generalizability, we document the robustness of the estimates. First, we examine the sensitivity of the results to the assumptions made when constructing the data used in estimation. Second, we document whether the estimated effects are sensitive to the identification strategies that we use to claim causality based on observational data. Our results reveal substantially smaller advertising elasticities compared ...

How and When to Use the Political Cycle to Identify Advertising Effects
Date Posted:Mon, 15 Jun 2020 18:27:12 -0500
A central challenge in estimating the causal effect of TV advertising on demand is isolating quasi-random variation in advertising. Political advertising, which topped $14 billion in expenditures in 2016, has been proposed as a plausible source of such variation and thus a candidate for an instrumental variable. We provide a critical evaluation of how and where this instrument is valid and useful across categories. We characterize the conditions under which political cycles theoretically identify the causal effect of TV advertising on demand, highlight threats to the exclusion restriction and monotonicity condition, and suggest a specification to address the most serious concerns. We test the strength of the first stage category-by-category for 274 product categories. For most categories, weak-instrument robust inference is recommended, as first-stage F-statistics are less than 10 for 221 of 274 product categories in our benchmark specification. The largest first-stage F-statistics occur in categories that typically advertise locally, such as automobile dealerships and restaurants. Failure to use the suggested specification leads to results that suggest violations of exclusion and monotonicity in a significant number of categories. Finally, we conduct a case study of the auto industry. Despite a very strong first stage, the IV estimate for this category is imprecise.

REVISION: Promoting Wellness or Waste? Evidence from Antidepressant Advertising
Date Posted:Thu, 02 Apr 2020 03:49:19 -0500
It is taken as given by many policy makers that Direct-to-Consumer Advertising of prescription drugs drives inappropriate patients to treatment. Alternatively, advertising may provide useful information that causes appropriate patients to seek treatment. I study this dynamic in the context of antidepressants. Leveraging variation driven by the borders of television markets, I find that a 10% increase in antidepressant advertising leads to a 0.3% ($32 million) increase in new prescriptions followed by reductions in workplace absenteeism worth about $770 million. I find no effect of advertising on prices, generic penetration, drug switches, adverse effects, non-adherence rates or therapist visits.

REVISION: How and When to Use the Political Cycle to Identify Advertising Effects
Date Posted:Mon, 09 Mar 2020 11:22:51 -0500
A central challenge in estimating the causal effect of TV advertising on demand is isolating quasi-random variation in advertising. Political advertising, which topped $14 billion in expenditures in 2016, has been proposed as a plausible source of such variation and thus a candidate for an instrumental variable. We provide a critical evaluation of how and where this instrument is valid and useful across categories. We characterize the conditions under which political cycles theoretically identify the causal effect of TV advertising on demand, highlight threats to the exclusion restriction and monotonicity condition, and suggest a specification to address the most serious concerns. We test the strength of the first stage category-by-category for 274 product categories. For most categories, weak-instrument robust inference is recommended, as first-stage F-statistics are less than 10 for at least 221 of 274 product categories in our benchmark specification. The largest first-stage ...

TV Advertising Effectiveness and Profitability: Generalizable Results from 288 Brands
Date Posted:Mon, 20 Jan 2020 10:21:21 -0600
We estimate the distribution of television advertising elasticities and the distribution of the advertising return on investment (ROI) for a large number of products in many categories. Our results reveal substantially smaller advertising elasticities compared to the results documented in the literature, as well as a sizable percentage of statistically insignificant or negative estimates. The results are robust to functional form assumptions and are not driven by insufficient statistical power or measurement error. The ROI analysis shows negative ROIs at the margin for more than 80% of brands, implying over-investment in advertising by most firms. While the overall ROI of the observed advertising schedule is only positive for one third of all brands, statistical uncertainty provides the possibility that advertising may be valuable for a larger number of brands if advertising is reduced at the margin.

REVISION: Promoting Wellness or Waste? Evidence from Antidepressant Advertising
Date Posted:Wed, 15 Jan 2020 04:14:32 -0600
It is taken as given by many policy makers that Direct-to-Consumer Advertising of prescription drugs drives inappropriate patients to treatment. Alternatively, advertising may provide useful information that causes appropriate patients to seek treatment. I study this dynamic in the context of antidepressants. Leveraging variation driven by the borders of television markets, I find that a 10% increase in antidepressant advertising leads to a 0.3% ($32 million) increase in new prescriptions followed by reductions in workplace absenteeism worth about $770 million. I find no effect of advertising on prices, generic penetration, drug switches, adverse effects, non-adherence rates or therapist visits.

REVISION: Generalizable and Robust TV Advertising Effects
Date Posted:Wed, 18 Sep 2019 05:29:14 -0500
We provide generalizable and robust results on the causal sales effect of TV advertising for a large number of products in many categories. Such generalizable results provide a prior distribution that can improve the advertising decisions made by firms and the analysis and recommendations of policy makers. A single case study cannot provide generalizable results, and hence the literature provides several meta-analyses based on published case studies of advertising effects. However, publication bias results if the research or review process systematically rejects estimates of small, statistically insignificant, or “unexpected” advertising elasticities. Consequently, if there is publication bias, the results of a meta-analysis will not reflect the true population distribution of advertising effects. To provide generalizable results, we base our analysis on a large number of products and clearly lay out the research protocol used to select the products. We characterize the distribution ...

REVISION: How and When to Use the Political Cycle to Identify Advertising Effects
Date Posted:Wed, 07 Aug 2019 10:31:33 -0500
A central challenge in estimating the causal effect of TV advertising on demand is finding quasi-random variation in advertising. Political advertising in the US has been proposed as a plausible instrumental variable because political spending on television has skyrocketed in recent elections, topping $4 billion in 2016. We take a multi-category approach to assessing how and where this instrument is valid and useful. We characterize the conditions under which political cycles theoretically identify the causal effect of TV advertising on demand, highlight potential threats to the exclusion restriction and monotonicity condition, and suggest a specification to address the most serious concerns. To characterize "where' the approach might be most useful, we test the strength of the first stage of the political ad instrument, using both a single instrument and also optimal instruments obtained by machine learning. For the majority of commercial advertising categories, our findings ...

REVISION: How and When to Use the Political Cycle to Identify Advertising Effects
Date Posted:Sun, 30 Jun 2019 06:31:29 -0500
A central challenge in estimating the causal effect of TV advertising on demand is finding quasi-random variation in advertising. Political advertising in the US has been proposed as a plausible instrumental variable because political spending on television has skyrocketed in recent elections, topping $4 billion in 2016. We characterize the conditions under which political cycles theoretically identify valid TV advertising effects on demand and highlight the potential areas of concern for the exclusion restriction and monotonicity condition. To characterize ``where' the approach might be most useful, we test the strength of the first stage of the political ad instrument using both a simple specification of the first stage and also optimal instruments obtained by machine learning. For the vast majority of commercial advertising categories, our findings suggest that researchers should consider using weak-instrument robust inference, as first stage F-statistics are less than 10 for at ...

How and When to Use the Political Cycle to Identify Advertising Effects
Date Posted:Thu, 20 Jun 2019 21:36:05 -0500
A central challenge in estimating the causal effect of TV advertising on demand is isolating quasi-random variation in advertising. Political advertising, which topped $14 billion in expenditures in 2016, has been proposed as a plausible source of such variation and thus a candidate for an instrumental variable. We provide a critical evaluation of how and where this instrument is valid and useful across categories. We characterize the conditions under which political cycles theoretically identify the causal effect of TV advertising on demand, highlight threats to the exclusion restriction and monotonicity condition, and suggest a specification to address the most serious concerns. We test the strength of the first stage category-by-category for 274 product categories. For most categories, weak-instrument robust inference is recommended, as first-stage F-statistics are less than 10 for at least 221 of 274 product categories in our benchmark specification. The largest first-stage F-statistics occur in categories that typically advertise locally, such as automobile dealerships and restaurants. Failure to use the suggested specification leads to results that suggest violations of exclusion and monotonicity in a significant number of categories. Finally, we conduct a case study of the auto industry. Despite a very strong first stage, the IV estimate for this category is imprecise.

REVISION: How and When to Use the Political Cycle to Identify Advertising Effects
Date Posted:Thu, 20 Jun 2019 12:36:12 -0500
A central challenge in estimating the causal effect of TV advertising on demand is finding quasi-random variation in advertising. Political advertising in the US has been proposed as a plausible instrumental variable because political spending on television has skyrocketed in recent elections, topping $4 billion in 2016. We characterize the conditions under which political cycles theoretically identify valid TV advertising effects on demand and highlight the potential areas of concern for the exclusion restriction and monotonicity condition. To characterize ``where' the approach might be most useful, we test the strength of the first stage of the political ad instrument using both a simple specification of the first stage and also optimal instruments obtained by machine learning. For the vast majority of commercial advertising categories, our findings suggest that researchers should consider using weak-instrument robust inference, as first stage F-statistics are less than 10 for at ...

REVISION: Generalizable and Robust TV Advertising Effects
Date Posted:Tue, 11 Jun 2019 10:59:59 -0500
We provide generalizable and robust results on the causal sales effect of TV advertising based on the distribution of advertising elasticities for a large number of products (brands) in many categories. Such generalizable results provide a prior distribution that can improve the advertising decisions made by firms and the analysis and recommendations of anti-trust and public policy makers. A single case study cannot provide generalizable results, and hence the marketing literature provides several meta-analyses based on published case studies of advertising effects. However, publication bias results if the research or review process systematically rejects estimates of small, statistically insignificant, or “unexpected” advertising elasticities. Consequently, if there is publication bias, the results of a meta-analysis will not reflect the true population distribution of advertising effects. To provide generalizable results, we base our analysis on a large number of products and ...

REVISION: Promoting Wellness or Waste? Evidence from Antidepressant Advertising
Date Posted:Fri, 10 May 2019 13:51:07 -0500
Direct-to-Consumer Advertising (DTCA) of prescription drugs is controversial. It is taken as given by many policy makers that DTCA wastefully drives inappropriate patients to treatment, distorts patients to expensive brands over generics and therefore wastefully increases health care costs. Alternatively, advertising has the potential to fill an information gap that causes treatably unwell patients to go untreated. I study this dynamic in the context of antidepressant advertising. Depression has large documented economic costs in terms of labor outcomes. If DTCA fills a legitimate information gap, it will lead to improved labor outcomes. Leveraging plausibly exogenous variation in advertising driven by the borders of television markets, I find that antidepressant advertising leads to new initiations of treatment followed by reductions in absenteeism. The wage benefit of a 10% increase in advertising is about $770 million. This labor supply effect co-occurs at the individual level ...

REVISION: Valuing Brand Collaboration: Evidence From a Natural Experiment
Date Posted:Sat, 16 Mar 2019 17:47:14 -0500
We study how brand impacts consumer demand in the context of museum memberships in a U.S. metropolitan city. Over the course of our sample, one major museum with a highly recognized brand closed. During the closure, it sequentially co-branded with two established local museums. The closure and collaboration events, combined with individual panel data on museum memberships, allow us to measure how these changes in brand affect demand. Collaboration with the closed museum lifts demand for the partner museum; however, this aggregate increase masks two counter-acting forces. First, customers with no history of buying membership from either museum enter the market, consistent with the prominent brand providing a signal of vertical quality. Second, a sub-group of customers who previously purchased from either or both of the museums display decreased demand. This is consistent with a model of brand providing information about horizontal match value, with decreasing demand from the ...

Valuing Brand Collaboration: Evidence From a Natural Experiment
Date Posted:Thu, 07 Mar 2019 14:32:14 -0600
We study complementarities between brands in the context of collaborations across museums. Over the course of our sample, one major museum with a highly recognized brand closed temporarily and sequentially collaborated with two established local museums. With individual panel data on museum memberships around these events, we measure how collaborations affect demand using an empirical framework of complementarities that are newly applied to the branding context. We observe two counter-acting demand patterns. First, customers with no history of buying membership from either museum enter the market, suggesting brand complementarities. Second, a sub-group of customers who previously purchased from either or both of the museums display decreased demand, consistent with brand dilution. Any structural approach that models the demand for collaboration with existing preferences for separate brands fails to create accurate demand predictions. The magnitude of the offsetting forces varies between collaboration events, which makes demand prediction even more challenging. These results call for a theory of brand being beyond a fixed utility primitive and have implications for counterfactuals that involve combining or altering of brands..

REVISION: Valuing Brand Collaboration: Evidence From a Natural Experiment
Date Posted:Thu, 07 Mar 2019 04:33:55 -0600
We study how brand impacts consumer demand in the context of museum memberships in a U.S. metropolitan city. Over the course of our sample, one major museum with a highly recognized brand closed. During the closure, it sequentially co-branded with two established local museums. The closure and collaboration events combined with individual panel data on museum memberships allow us to measure how these changes in brand affect demand. Collaboration with the closed museum lifts demand for the partner museum, however this aggregate increase masks two counteracting forces. First, customers with no history of buying membership from either museum enter the market, consistent with the prominent brand providing a signal of vertical quality. Second, a sub-group of customers who previously purchased from either or both of the museums display decreased demand. This is consistent with a model of brand providing information about horizontal match value, with decreasing demand from the broadening of ...

REVISION: Generalizable and Robust TV Advertising Effects
Date Posted:Mon, 25 Feb 2019 15:04:05 -0600
We provide generalizable and robust results on the causal sales effect of TV advertising based on the distribution of advertising elasticities for a large number of products (brands) in many categories. Such generalizable results provide a prior distribution that can improve the advertising decisions made by firms and the analysis and recommendations of anti-trust and public policy makers. A single case study cannot provide generalizable results, and hence the marketing literature provides several meta-analyses based on published case studies of advertising effects. However, publication bias results if the research or review process systematically rejects estimates of small, statistically insignificant, or “unexpected” advertising elasticities. Consequently, if there is publication bias, the results of a meta-analysis will not reflect the true population distribution of advertising effects. To provide generalizable results, we base our analysis on a large number of products and ...

REVISION: Generalizable and Robust TV Advertising Effects
Date Posted:Sun, 17 Feb 2019 07:13:02 -0600
We provide generalizable and robust results on the causal sales effect of TV advertising based on the distribution of advertising elasticities for a large number of products (brands) in many categories. Such generalizable results provide a prior distribution that can improve the advertising decisions made by firms and the analysis and recommendations of anti-trust and public policy makers. A single case study cannot provide generalizable results, and hence the marketing literature provides several meta-analyses based on published case studies of advertising effects. However, publication bias results if the research or review process systematically rejects estimates of small, statistically insignificant, or “unexpected” advertising elasticities. Consequently, if there is publication bias, the results of a meta-analysis will not reflect the true population distribution of advertising effects. To provide generalizable results, we base our analysis on a large number of products and ...

REVISION: Generalizable and Robust TV Advertising Effects
Date Posted:Fri, 15 Feb 2019 02:18:34 -0600
We provide generalizable and robust results on the causal sales effect of TV advertising based on the distribution of advertising elasticities for a large number of products (brands) in many categories. Such generalizable results provide a prior distribution that can improve the advertising decisions made by firms and the analysis and recommendations of anti-trust and public policy makers. A single case study cannot provide generalizable results, and hence the marketing literature provides several meta-analyses based on published case studies of advertising effects. However, publication bias results if the research or review process systematically rejects estimates of small, statistically insignificant, or “unexpected” advertising elasticities. Consequently, if there is publication bias, the results of a meta-analysis will not reflect the true population distribution of advertising effects. To provide generalizable results, we base our analysis on a large number of products and ...

REVISION: Generalizable and Robust TV Advertising Effects
Date Posted:Fri, 08 Feb 2019 08:57:13 -0600
We provide generalizable and robust results on the causal sales effect of TV advertising based on the distribution of advertising elasticities for a large number of products (brands) in many categories. Such generalizable results provide a prior distribution that can improve the advertising decisions made by firms and the analysis and recommendations of anti-trust and public policy makers. A single case study cannot provide generalizable results, and hence the marketing literature provides several meta-analyses based on published case studies of advertising effects. However, publication bias results if the research or review process systematically rejects estimates of small, statistically insignificant, or “unexpected” advertising elasticities. Consequently, if there is publication bias, the results of a meta-analysis will not reflect the true population distribution of advertising effects. To provide generalizable results, we base our analysis on a large number of products and ...

REVISION: Generalizable and Robust TV Advertising Effects
Date Posted:Sat, 26 Jan 2019 06:27:15 -0600
We provide generalizable and robust results on the causal sales effect of TV advertising based on the distribution of advertising elasticities for a large number of products (brands) in many categories. Such generalizable results provide a prior distribution that can improve the advertising decisions made by firms and the analysis and recommendations of anti-trust and public policy makers. A single case study cannot provide generalizable results, and hence the marketing literature provides several meta-analyses based on published case studies of advertising effects. However, publication bias results if the research or review process systematically rejects estimates of small, statistically insignificant, or “unexpected” advertising elasticities. Consequently, if there is publication bias, the results of a meta-analysis will not reflect the true population distribution of advertising effects. To provide generalizable results, we base our analysis on a large number of products and ...

REVISION: Promoting Wellness or Waste? Evidence from Antidepressant Advertising
Date Posted:Sun, 30 Dec 2018 05:34:51 -0600
Direct-to-Consumer Advertising (DTCA) of prescription drugs is controversial. Even if drugs are efficacious, advertising may drive people to be prescribed for whom treatment will be ineffective. Leveraging plausibly exogenous variation in advertising driven by the borders of television markets, this paper provides the first quasi-experimental measurement of the effect of DTCA on ex-post well-being. In particular, antidepressant advertising decreases work absenteeism, a primary outcome associated with depression. The wage benefit of a 10% increase in advertising is about $770 million. This labor supply effect co-occurs at the individual level with an incremental $32 million in new initiations of antidepressant treatment. Keywords: Advertising, Selection, Pharmaceuticals, Labor Supply.

REVISION: Generalizable and Robust TV Ad Effects
Date Posted:Fri, 16 Nov 2018 10:24:03 -0600
Much of the empirical literature exploring the economics of advertising may not be generalizable because it uses a case-study model of research, finding a particular effect in a single category and exploring the implications of that effect only in that category. Publication bias may further distort our understanding of the distribution of realized advertising effects if it discourages researchers from pursuing projects where a null effect may exist. Additionally, empirical identification in many studies of advertising can suffer due to a lack of exogenous variation. In this paper, we study the effects of TV advertising across a broad range of brands and categories, which allows us to characterize the full distribution of advertising elasticities. We also evaluate the sensitivity of our results to different identifying assumptions that are frequently employed in the literature. Our distributional analysis provides insights into i) whether or not effects found in the literature are ...

REVISION: Promoting Wellness or Waste? Evidence from Antidepressant Advertising
Date Posted:Fri, 09 Nov 2018 03:29:07 -0600
Direct-to-Consumer Advertising (DTCA) of prescription drugs is controversial. Even if drugs are efficacious, advertising may drive people to be prescribed for whom treatment will be ineffective. Leveraging plausibly exogenous variation in advertising driven by the borders of television markets, this paper provides the first quasi-experimental measurement of the effect of DTCA on ex-post well-being. In particular, antidepressant advertising decreases work absenteeism, a primary outcome associated with depression. The wage benefit of a 10% increase in advertising is about $770 million. This labor supply effect co-occurs at the individual level with an incremental $32 million in new initiations of antidepressant treatment. Keywords: Advertising, Selection, Pharmaceuticals, Labor Supply.

REVISION: Promoting Wellness or Waste? Evidence from Antidepressant Advertising
Date Posted:Tue, 14 Aug 2018 13:01:44 -0500
Direct-to-Consumer Advertising (DTCA) of prescription drugs is controversial. Even if drugs are efficacious, advertising may inappropriately select patients into treatment. Leveraging advertising variation driven by the borders of television markets, this paper provides the first quasi-experimental measurement of the effect of DTCA on an ex-post measure of consumer well-being. In particular, DTCA of antidepressants significantly decreases missed days of work, a primary outcome associated with depression. Back-of-the-envelope calculations suggest that the wage benefit of a 10% increase in advertising is about $770 million per year while the total cost of the corresponding advertising-marginal prescriptions is about $32 million.

REVISION: Promoting Wellness or Waste? Evidence from Antidepressant Advertising
Date Posted:Mon, 13 Aug 2018 16:08:46 -0500
Direct-to-Consumer Advertising (DTCA) of prescription drugs is controversial. Even if drugs are efficacious, advertising may inappropriately select patients into treatment. Leveraging advertising variation driven by the borders of television markets, this paper provides the first quasi-experimental measurement of the effect of DTCA on an ex-post measure of consumer well-being. In particular, DTCA of antidepressants significantly decreases missed days of work, a primary outcome associated with depression. Back-of-the-envelope calculations suggest that the wage benefit of a 10% increase in advertising is about $770 million per year while the total cost of the corresponding advertising-marginal prescriptions is about $32 million.

REVISION: Advertising in Health Insurance Markets
Date Posted:Wed, 01 Aug 2018 08:27:48 -0500
The effects of television advertising in the market for health insurance are of distinct interest to both firms and regulators. Regulators are concerned about firms potentially using ads to "cream skim," or attract an advantageous risk pool, as well as the potential for firms to use misinformation to take advantage of the elderly. Firms are interested in using advertising to acquire potentially highly profitable seniors. Meanwhile, health insurance is a useful setting to study the mechanisms through which advertising could work. Using the discontinuity in advertising exposure created by the borders of television markets, this study estimates the effects of advertising on consumer choice in health insurance. Television advertising has a small effect on brand enrollments, making advertising a relatively expensive means of acquiring customers. Heterogeneous effects point to advertising being more effective in less healthy counties, which runs opposite to the concern of cream skimming. ...

REVISION: Promoting Wellness or Waste? Evidence from Antidepressant Advertising
Date Posted:Tue, 31 Jul 2018 02:48:13 -0500
Direct-to-Consumer Advertising (DTCA) of prescription drugs is controversial. Even if drugs are efficacious, advertising may inappropriately select patients into treatment. Leveraging advertising variation driven by the borders of television markets, this paper provides the first quasi-experimental measurement of the effect of DTCA on an ex-post measure of consumer well-being. In particular, DTCA of antidepressants significantly decreases missed days of work, a primary outcome associated with depression. Back-of-the-envelope calculations suggest that the wage benefit of a 10% increase in advertising is about $770 million per year while the total cost of the corresponding advertising-marginal prescriptions is about $32 million.

REVISION: Promoting Wellness or Waste? Evidence from Antidepressant Advertising
Date Posted:Sun, 17 Jun 2018 11:23:43 -0500
Direct-to-Consumer Advertising (DTCA) of prescription drugs is controversial and has ambiguous potential welfare effects. This paper provides the first quasi-experimental measurement of dollar benefits of DTCA and compares those with measured costs to patients and payers. In particular, individual health insurance claims are matched to human resource records on job attendance to measure the effects of DTCA on outcomes relevant to costs and benefits. Quasi-random variation driven by the borders of television markets is leveraged to facilitate causal inference. On the cost side, DTCA causes new prescriptions of antidepressants with an elasticity of about 0.031. This category expansive effect is partially offset by a small negative effect of DTCA on refills. Additionally, I find evidence of no advertising effect on the prices or co-pays of the drugs prescribed, the generic penetration rate or the rate of adverse effects. On the benefits side, DTCA significantly decreases missed days of ...

REVISION: Promoting Wellness or Waste? Evidence from Antidepressant Advertising
Date Posted:Sat, 05 May 2018 09:07:24 -0500
Direct-to-Consumer Advertising (DTCA) of prescription drugs is controversial and has ambiguous potential welfare effects. In this paper, I estimate costs and benefits of DTCA to patients and payers in the market for antidepressant drugs to assess whether advertising marginal prescriptions are desirable on average. In particular, using individual health insurance claims and human resources data, I estimate the effects of DTCA on outcomes relevant to patient and payer costs: new prescriptions, prices and adherence. Additionally I estimate the effect of DTCA on labor supply, the economic outcome most associated with depression. First, category expansive effects of DTCA found in past literature are replicated, with DTCA particularly causing new prescriptions of antidepressants. Meanwhile, concurrent advertising drives slightly lower refill rates. Additionally, I find evidence of no advertising effect on the prices or co-pays of the drugs prescribed, the generic penetration rate or the ...

REVISION: Promoting Wellness or Waste? Evidence from Antidepressant Advertising
Date Posted:Mon, 19 Mar 2018 09:21:47 -0500
Direct-to-Consumer Advertising (DTCA) of prescription drugs is controversial and has ambiguous potential welfare effects. In this paper, I estimate costs and benefits of DTCA in the market for antidepressant drugs. In particular, using individual health insurance claims and human resources data, I estimate the effects of DTCA on outcomes relevant to societal costs: new prescriptions, prices and adherence. Additionally I estimate the effect of DTCA on labor supply, the economic outcome most associated with depression. First, category expansive effects of DTCA found in past literature are replicated, with DTCA particularly causing new prescriptions of antidepressants. Additionally, I find evidence of no advertising effect on the prices or co-pays of the drugs prescribed or on the generic penetration rate. Next, lagged advertising is associated with higher first refill rates, indicating that the advertising marginal are not more likely to end treatment prematurely due to initial adverse ...

Promoting Wellness or Waste? Evidence from Antidepressant Advertising
Date Posted:Tue, 06 Mar 2018 12:42:56 -0600
It is taken as given by many policy makers that Direct-to-Consumer Advertising of prescription drugs drives inappropriate patients to treatment. Alternatively, advertising may provide useful information that causes appropriate patients to seek treatment. I study this dynamic in the context of antidepressants. Leveraging variation driven by the borders of television markets, I find that a 10% increase in antidepressant advertising leads to a 0.3% ($32 million) increase in new prescriptions followed by reductions in workplace absenteeism worth about $770 million. I find no effect of advertising on prices, generic penetration, drug switches, adverse effects, non-adherence rates or therapist visits.

REVISION: Promoting Wellness or Waste? Evidence from Antidepressant Advertising
Date Posted:Tue, 06 Mar 2018 02:42:56 -0600
Direct-to-Consumer Advertising (DTCA) of prescription drugs is controversial and has ambiguous potential welfare effects. In this paper, I estimate costs and benefits of DTCA in the market for antidepressant drugs. In particular, using individual health insurance claims and human resources data, I estimate the effects of DTCA on outcomes relevant to societal costs: new prescriptions, prices and adherence. Addtionally I estimate the effect of DTCA on labor supply, the economic outcome most associated with depression. First, category expansive effects of DTCA found in past literature are replicated, with DTCA particularly causing new prescriptions of antidepressants. Additionally, I find evidence of no advertising effect on either the prices or co-pays of the drugs prescribed. Next, lagged advertising is associated with higher first refill rates, indicating that the advertising marginal are not more likely to end treatment prematurely due to initial adverse effects. Despite first ...

REVISION: Informational Shocks, Off-Label Prescribing and the Effects of Physician Detailing
Date Posted:Fri, 19 Jan 2018 03:53:51 -0600
The relationship between pharmaceutical detailing and prescriptions for non FDA-approved (off-label) use has been the subject of regulatory scrutiny, with more than $12 billion in regulatory settlements for off-label promotion since 2004. Using the case of AstraZeneca's anti-psychotic drug, Seroquel, I study the extent to which off-label prescriptions are caused by detailing. Using a physician panel that connects detailing exposure to medical charts, I exploit within-physician variation to identify detailing effects. I find the effect of detailing on off-label prescriptions is small in both absolute and relative terms. Detailing on net tilts the prescribing distribution toward on-label.

REVISION: Positive Spillovers and Free Riding in Advertising of Prescription Pharmaceuticals: The Case of Antidepressants
Date Posted:Fri, 12 Jan 2018 00:42:00 -0600
Exploiting the discontinuity in advertising along the borders of television markets, I estimate that television advertising of prescription antidepressants exhibits significant positive spillovers on rivals' demand. I apply this identification in a demand model, where estimated parameters indicate significant and persistent spillovers driven by market expansion. Using the demand estimates to calibrate a stylized supply model, I explore the consequences of the positive spillovers on firm advertising choice. Compared with a competitive benchmark in which firms optimally free ride, simulations suggest a category-wide advertising cooperative would produce a significant increase in total advertising.

REVISION: Advertising in Health Insurance Markets
Date Posted:Fri, 13 Oct 2017 11:27:11 -0500
The effects of television advertising in the market for health insurance are of distinct interest to both firms and regulators. Regulators are concerned about firms potentially using ads to "cream skim," or attract an advantageous risk pool, as well as the potential for firms to use misinformation to take advantage of the elderly. Firms are interested in using advertising to acquire potentially highly profitable seniors. Meanwhile, health insurance is a useful setting to study the mechanisms through which advertising could work. Using the discontinuity in advertising exposure created by the borders of television markets, this study estimates the effects of advertising on consumer choice in health insurance. Television advertising has a small effect on brand enrollments, making advertising a relatively expensive means of acquiring customers. Heterogeneous effects point to advertising being more effective in less healthy counties, which runs opposite to the concern of cream skimming. ...

REVISION: Informational Shocks, Off-Label Prescribing and the Effects of Physician Detailing
Date Posted:Fri, 21 Jul 2017 02:13:27 -0500
The relationship between pharmaceutical detailing and prescriptions for non FDA-approved (off-label) use has been the subject of regulatory scrutiny, with more than $12 billion in regulatory settlements for off-label promotion since 2004. Using the case of AstraZeneca's anti-psychotic drug, Seroquel, I study the extent to which off-label prescriptions are caused by detailing. Using a physician panel that connects detailing exposure to medical charts, I exploit within-physician variation to identify detailing effects. I find the effect of detailing on off-label prescriptions is small in both absolute and relative terms. Detailing on net tilts the prescribing distribution toward on-label.

REVISION: Advertising in Health Insurance Markets
Date Posted:Sun, 05 Mar 2017 21:50:57 -0600
The effects of television advertising in the market for health insurance are of distinct interest to both firms and regulators. Regulators are concerned about firms potentially using ads to "cream skim," or attract an advantageous risk pool, as well as the potential for firms to use misinformation to take advantage of the elderly. Firms are interested in using advertising to acquire potentially highly profitable seniors. Meanwhile, health insurance is a useful setting to study the mechanisms through which advertising could work. Using the discontinuity in advertising exposure created by the borders of television markets, this study estimates the effects of advertising on consumer choice in health insurance. Television advertising has a small effect on brand enrollments, making advertising a relatively expensive means of acquiring customers. Heterogeneous effects point to advertising being more effective in less healthy counties, which runs opposite to the concern of cream skimming. ...

REVISION: Advertising in Health Insurance Markets
Date Posted:Tue, 29 Nov 2016 09:55:02 -0600
The effects of television advertising in market for health insurance are of distinct interest to both firms and regulators, due to both the sheer size of the market and some of its more particular characteristics when it comes to consumer choice. Regulators are concerned about firms potentially using ads to "cream skim," or attract an advantageous risk pool, as well as the potential for firms to use misinformation to take advantage of the elderly. On the other hand, ads could provide useful information or remind people to reconsider their options, making regulation potentially welfare-reducing. Using the discontinuity in advertising exposure created by the borders of television markets, this study estimates television advertising to have on average zero lift on both the share of seniors who choose private Medicare Advantage (MA) plans over government-provided Traditional Medicare (TM), as well as brand share conditional on MA purchase with enough precision to exclude positive ROI ...

REVISION: Advertising in Health Insurance Markets
Date Posted:Tue, 22 Nov 2016 12:24:29 -0600
The effect of television advertising in market for health insurance are of distinct interest to both firms and regulators, due to both the sheer size of the market and some of its more particular characteristics when it comes to consumer choice. Regulators are concerned about firms potentially using ads to "cream skim," or attract an advantageous risk pool, as well as the potential for firms to use misinformation to take advantage of the elderly. On the other hand, ads could provide useful information or remind people to reconsider their options, making regulation potentially welfare-reducing. Using the discontinuity in advertising exposure created by the borders of television markets, this study estimates television advertising to have on average zero lift on both the share of seniors who choose private Medicare Advantage (MA) plans over government-provided Traditional Medicare (TM), as well as brand share conditional on MA purchase with enough precision to exclude positive ROI from ...

REVISION: Advertising in Health Insurance Markets
Date Posted:Thu, 17 Nov 2016 12:15:14 -0600
The effect of television advertising in market for health insurance are of distinct interest to both firms and regulators, due to both the sheer size of the market and some of its more particular characteristics when it comes to consumer choice. Regulators are concerned about firms potentially using ads to "cream skim," or attract an advantageous risk pool, as well as the potential for firms to use misinformation to take advantage of the elderly. On the other hand, ads could provide useful information or remind people to reconsider their options, making regulation potentially welfare-reducing. Using the discontinuity in advertising exposure created by the borders of television markets, this study estimates television advertising to have on average zero lift on both the share of seniors who choose private Medicare Advantage (MA) plans over government-provided Traditional Medicare (TM), as well as brand share conditional on MA purchase with enough precision to exclude positive ROI from ...

REVISION: Advertising in Health Insurance Markets
Date Posted:Thu, 03 Nov 2016 13:08:06 -0500
The effects of television advertising in markets for health insurance are of distinct interest to both firms and regulators, due to both its sheer size and some of its more particular characteristics when it comes to consumer choice. Regulators are concerned about firms potentially using ads to "cream skim', or attract an advantageous risk pool as well as the potential for firms to use misinformation to take advantage of the elderly. On the other hand, ads could provide useful information or remind people to reconsider their options, making regulation potentially welfare reducing. Using the discontinuity in advertising exposure created by the borders of television markets, this study estimates television advertising to have on average zero lift on both the share of seniors who choose private Medicare Advantage (MA) plans over government-provided Traditional Medicare (TM) as well as brand share conditional on MA purchase with enough precision to exclude positive ROI from the 95% ...

REVISION: Estimating the Cost of Strategic Entry Delay in Pharmaceuticals: The Case of Ambien CR
Date Posted:Wed, 28 Sep 2016 09:54:00 -0500
With the Hatch-Waxman Act of 1984, the FDA included an unchallengeable exclusivity period for newly approved drugs, independent of patents. This potentially generates an incentive for firms to strategically delay the introduction of new versions (reformulations) of drugs until just before patent expiration of the original drug. This way the reformulated drug competes mainly with newly introduced generics of the original drug. If instead, the reformulated drug was to be introduced well before the original drug’s patent expires, the reformulated drug would compete only with the original drug. While the pattern of strategic delay is well documented in the literature, its effects on consumers and firms are not. Reformulations may increase utility through improved efficacy and through fewer doses per day or a more even molecule decay rate. However, as suggested in the press and literature, it is also possible that the adoption of reformulated products is mostly the result of advertising ...

REVISION: Estimating the Cost of Strategic Entry Delay in Pharmaceuticals: The Case of Ambien CR
Date Posted:Thu, 25 Aug 2016 10:18:15 -0500
With the Hatch-Waxman Act of 1984, the FDA included an unchallengeable exclusivity period for newly approved drugs, independent of patents. This potentially generates an incentive for firms to strategically delay the introduction of new versions (reformulations) of drugs until just before patent expiration of the original drug. This way the reformulated drug competes mainly with newly introduced generics of the original drug. If instead, the reformulated drug was to be introduced well before the original drug’s patent expires, the reformulated drug would compete only with the original drug. While the pattern of strategic delay is well documented in the literature, its effects on consumers and firms are not. Reformulations may increase utility through improved efficacy and through fewer doses per day or a more even molecule decay rate. However, as suggested in the press and literature, it is also possible that the adoption of reformulated products is mostly the result of advertising ...

REVISION: Estimating the Cost of Strategic Entry Delay in Pharmaceuticals: The Case of Ambien CR
Date Posted:Sat, 13 Aug 2016 05:41:09 -0500
With the Hatch-Waxman Act of 1984, the FDA included an unchallengeable exclusivity period for newly approved drugs, independent of patents. This potentially generates an incentive for firms to strategically delay the introduction of new versions (reformulations) of drugs until just before patent expiration of the original drug. This way the reformulated drug competes mainly with newly introduced generics of the original drug. If instead, the reformulated drug was to be introduced well before the original drug’s patent expires, the reformulated drug would compete only with the original drug. While the pattern of strategic delay is well documented in the literature, its effects on consumers and firms are not. Reformulations may increase utility through improved efficacy and through fewer doses per day or a more even molecule decay rate. However, as suggested in the press and literature, it is also possible that the adoption of reformulated products is mostly the result of advertising ...

REVISION: Estimating the Cost of Strategic Entry Delay in Pharmaceuticals: The Case of Ambien CR
Date Posted:Wed, 10 Aug 2016 23:46:14 -0500
With the Hatch-Waxman Act of 1984, the FDA included an unchallengeable exclusivity period for newly approved drugs, independent of patents. This potentially generates an incentive for firms to strategically delay the introduction of new versions (reformulations) of drugs until just before patent expiration of the original drug. This way the reformulated drug competes mainly with newly introduced generics of the original drug. If instead, the reformulated drug was to be introduced well before the original drug’s patent expires, the reformulated drug would compete only with the original drug. While the pattern of strategic delay is well documented in the literature, its effects on consumers and firms are not. Reformulations may increase utility through improved efficacy and through fewer doses per day or a more even molecule decay rate. However, as suggested in the press and literature, it is also possible that the adoption of reformulated products is mostly the result of advertising ...

REVISION: Estimating the Cost of Strategic Entry Delay in Pharmaceuticals: The Case of Ambien CR
Date Posted:Sun, 07 Aug 2016 02:52:44 -0500
With the Hatch-Waxman Act of 1984, the FDA included an unchallengeable exclusivity period for new approved drugs, independent of patents. This potentially generates an incentive for firms to strategically delay the introduction of new versions of drugs until just before patent expiration of the originals in order to take market share away from new generics rather than its own original product in its time of FDA exclusivity. This pattern of delay in the pharmaceutical industry is well documented in the literature, but its effects are less studied. While there is limited clinical evidence that reformulated products have higher efficacy than the original molecules, it is possible that they provide utility through other characteristics, such as fewer doses per day or a more even molecule decay rate. However, as suggested in the press and literature, it is possible that usage of reformulated products is driven by advertising rather than any tangible benefits. Using detailed prescribing ...

REVISION: Informational Shocks, Off-Label Prescribing and the Effects of Physician Detailing
Date Posted:Fri, 08 Jul 2016 14:44:20 -0500
The relationship between pharmaceutical detailing and prescriptions for non FDA-approved (off-label) use has been the subject of regulatory scrutiny, with more than $12 billion in regulatory settlements for off-label promotion since 2004. Using the case of AstraZeneca's anti-psychotic drug, Seroquel, I study the extent to which off-label prescriptions are caused by detailing. Using a physician panel that connects detailing exposure to medical charts, I exploit within-physician variation to identify detailing effects. I find the effect of detailing on off-label prescriptions is small in both absolute and relative terms. Detailing on net tilts the prescribing distribution toward on-label.

REVISION: Informational Shocks, Off-Label Prescribing and the Effects of Physician Detailing
Date Posted:Fri, 01 Jul 2016 02:17:44 -0500
The relationship between pharmaceutical detailing and prescriptions for non FDA-approved (off-label) use has been the subject of regulatory scrutiny, with more than $12 billion in regulatory settlements for off-label promotion since 2004. Using the case of AstraZeneca's anti-psychotic drug, Seroquel, I study the extent to which off-label prescriptions are caused by detailing. Using a physician panel that connects detailing exposure to medical charts, I exploit within-physician variation to identify detailing effects. I find the effect of detailing on off-label prescriptions is small in both absolute and relative terms. Detailing on net tilts the prescribing distribution toward on-label.

REVISION: Advertising in Health Insurance Markets
Date Posted:Mon, 27 Jun 2016 12:01:37 -0500
We study the effect of television ads in the market for health insurance for the elderly. Regulators are concerned about firms potentially using ads to "cream skim", or attract an advantageous risk pool as well as the potential for firms to use misinformation to take advantage of the elderly. On the other hand, ads could provide useful information or remind people to reconsider their options, making regulation potentially welfare reducing. Using the discontinuity in advertising exposure created by the borders of television markets, we estimate television advertising to have on average zero lift on the share of seniors who choose private Medicare Advantage (MA) plans over government-provided Traditional Medicare (TM) with enough precision to reject the null of positive ROI from market expansion. Leveraging the unilateral cessation of advertising by United Healthcare for three years, we additionally find that rival advertising provided zero average impact on United's brand share with ...

REVISION: Advertising in Health Insurance Markets
Date Posted:Wed, 08 Jun 2016 02:28:58 -0500
We study the effect of television ads in the market for health insurance for the elderly. Regulators are concerned about firms potentially using ads to "cream skim", or attract an advantageous risk pool as well as the potential for firms to use misinformation to take advantage of the elderly. On the other hand, ads could provide useful information or remind people to reconsider their options, making regulation potentially welfare reducing. Using the discontinuity in advertising exposure created by the borders of television markets, we estimate television advertising to have on average zero lift on the share of seniors who choose private Medicare Advantage (MA) plans over government-provided Traditional Medicare (TM) with enough precision to reject the null of positive ROI from market expansion. Leveraging the unilateral cessation of advertising by United Healthcare for three years, we additionally find that rival advertising provided zero average impact on United's brand share with ...

Advertising in Health Insurance Markets
Date Posted:Sun, 05 Jun 2016 15:05:35 -0500
The effects of television advertising in the market for health insurance are of distinct interest to both firms and regulators. Regulators are concerned about firms potentially using ads to "cream skim," or attract an advantageous risk pool, as well as the potential for firms to use misinformation to take advantage of the elderly. Firms are interested in using advertising to acquire potentially highly profitable seniors. Meanwhile, health insurance is a useful setting to study the mechanisms through which advertising could work. Using the discontinuity in advertising exposure created by the borders of television markets, this study estimates the effects of advertising on consumer choice in health insurance. Television advertising has a small effect on brand enrollments, making advertising a relatively expensive means of acquiring customers. Heterogeneous effects point to advertising being more effective in less healthy counties, which runs opposite to the concern of cream skimming. Leveraging the unilateral cessation of advertising by United Healthcare, evidence is provided that the small advertising effect is not explained by a prisoner's dilemma equilibrium. An analysis of longer-run effects of advertising shows that advertising effects are short-lived, further decreasing the potential of advertising to create long run value to the firm.

REVISION: Advertising in Health Insurance Markets
Date Posted:Sun, 05 Jun 2016 06:05:35 -0500
We study the effect of television ads in the market for health insurance for the elderly. Regulators are concerned about firms potentially using ads to "cream skim", or attract an advantageous risk pool as well as the potential for firms to use misinformation to take advantage of the elderly. On the other hand, ads could provide useful information or remind people to reconsider their options, making regulation potentially welfare reducing. Using the discontinuity in advertising exposure created by the borders of television markets, we estimate television advertising to have on average zero lift on the share of seniors who choose private Medicare Advantage (MA) plans over government-provided Traditional Medicare (TM) with enough precision to reject the null of positive ROI from market expansion. Leveraging the unilateral cessation of advertising by United Healthcare for three years, we additionally find that rival advertising provided zero average impact on United's brand share with ...

REVISION: Positive Spillovers and Free Riding in Advertising of Prescription Pharmaceuticals: The Case of Antidepressants
Date Posted:Fri, 13 May 2016 02:11:00 -0500
Television advertising of prescription drugs is controversial, and it remains illegal in all but two countries. Much of the opposition stems from concerns that advertising directly to consumers may inefficiently distort prescribing patterns toward the advertised product. Despite the controversy surrounding the practice, its effects are not well understood. Exploiting a discontinuity in advertising along the borders of television markets, I estimate that television advertising of prescription antidepressants exhibits significant positive spillovers on rivals' demand. I then construct and estimate a multi-stage demand model that allows advertising to be pure category expansion, pure business stealing, or some of each. Estimated parameters indicate advertising has strong market-level demand effects that tend to dominate business-stealing effects. Spillovers are both large and persistent. Using the demand estimates and a stylized supply model, I explore the consequences of the positive ...

REVISION: Informational Shocks, Off-Label Prescribing and the Effects of Physician Detailing
Date Posted:Sun, 31 Jan 2016 14:49:30 -0600
Promotional strategies that pharmaceutical firms employ to convince physicians to prescribe their products are the subject of considerable regulatory scrutiny. In particular, regulators worry firms may use sales reps to try to convince physicians to prescribe drugs for uses that the Food and Drug Administration has not approved. Since 2004, 31 federal cases alleging off-label promotional practices have settled, totaling over $12 billion. In this paper, I study the effects of detailing on physician prescribing in the anti-psychotic category, which was the category most heavily targeted for off-label promotion. Using physician level panel detailing data combined with patient chart information, I explore how detailing causes physicians to prescribe for on-label versus off-label uses. This question is important for considering whether regulators should spend more or less of their scarce resources pursuing such cases. Additionally, with the risk of huge fines, this question is relevant to ...

REVISION: Informational Shocks, Off-Label Prescribing and the Effects of Physician Detailing
Date Posted:Fri, 15 Jan 2016 23:04:18 -0600
Promotional strategies that pharmaceutical firms employ to convince physicians to prescribe their products are the subject of considerable regulatory scrutiny. In particular, regulators worry firms may use sales reps to try to convince physicians to prescribe drugs for uses that the Food and Drug Administration has not approved. Since 2004, 31 federal cases alleging off-label promotional practices have settled, totaling over $12 billion. In this paper, I study the effects of detailing on physician prescribing in the anti-psychotic category, which was the category most heavily targeted for off-label promotion. Using physician level panel detailing data combined with patient chart information, I explore how detailing causes physicians to prescribe for on-label versus off-label uses. This question is important for considering whether regulators should spend more or less of their scarce resources pursuing such cases. Additionally, with the risk of huge fines, this question is relevant to ...

REVISION: Positive Spillovers and Free Riding in Advertising of Prescription Pharmaceuticals: The Case of Antidepressants
Date Posted:Wed, 11 Nov 2015 05:21:47 -0600
Television advertising of prescription drugs is controversial, and it remains illegal in all but two countries. Much of the opposition stems from concerns that advertising directly to consumers may inefficiently distort prescribing patterns toward the advertised product. Despite the controversy surrounding the practice, its effects are not well understood. Exploiting a discontinuity in advertising along the borders of television markets, I estimate that television advertising of prescription antidepressants exhibits significant positive spillovers on rivals' demand. I then construct and estimate a multi-stage demand model that allows advertising to be pure category expansion, pure business stealing, or some of each. Estimated parameters indicate advertising has strong market-level demand effects that tend to dominate business-stealing effects. Spillovers are both large and persistent. Using the demand estimates and a stylized supply model, I explore the consequences of the positive ...

REVISION: Informational Shocks, Off-Label Prescribing and the Effects of Physician Detailing
Date Posted:Tue, 27 Oct 2015 09:25:03 -0500
Promotional strategies that pharmaceutical firms employ to convince physicians to prescribe their products are the subject of considerable regulatory scrutiny. In particular, regulators worry firms may use sales reps to try to convince physicians to prescribe drugs for uses that the Food and Drug Administration has not approved. Since 2004, 31 federal cases alleging off-label promotional practices have settled, totaling over $12 billion. In this paper, I study the effects of detailing on physician prescribing in the anti-psychotic category, which was the category the federal government most heavily targeted for off-label promotion. I identify the effects of detailing using within-physician variation, along with two studies that disseminated new scientific information. Detailing effects are modest but statistically significant. Although detailing lifts both on-label and off-label prescriptions, it disproportionately increases on-label, tilting the distribution of prescriptions toward ...

REVISION: Informational Shocks, Off-Label Prescribing and the Effects of Physician Detailing
Date Posted:Wed, 02 Sep 2015 03:40:11 -0500
Promotional strategies employed by pharmaceutical firms to convince physicians to prescribe their products are the subject of considerable regulatory scrutiny. In particular, regulators worry that firms may use sales reps to try to convince physicians to prescribe drugs for uses that have not been approved by the Food and Drug Administration. Since 2004, 31 federal cases alleging off-label promotional practices have settled, totaling over $12 billion. In this paper, I study the effects of detailing on physician prescribing in the anti-psychotic category, which was the category most heavily targeted by the federal government for off-label promotion. I identify the effects of detailing using within-physician variation along with two studies that disseminated new information that drastically changed the nature of competition. Detailing effects are modest, but statistically significant. While detailing lifts both on-label and off-label prescriptions, I find evidence that it ...

REVISION: Informational Shocks, Off-Label Prescribing and the Effects of Physician Detailing
Date Posted:Thu, 09 Jul 2015 01:56:53 -0500
The effects of pharmaceutical firm advertising directly to physicians using sales reps, or detailing, has been a major area of interest for both regulators and firms. As firms spend over ten billion dollars per year on detailing activities, understanding the response of such inputs is crucial to profit maximization. Regulators, on the other hand, worry that detailing might be illegally focused on off-label prescribing. In this paper, I estimate the effect of detailing in the antipsychotic category, a roughly $9 billion per year category which has been hit with over $6.5 billion in regulatory fines due to promotional practices in the past fifteen years. I estimate these effects using two studies that disseminated new information that drastically changed the nature of competition. Detailing effects are modest, but statistically significant, with the average effect of a visit being to increase prescriptions by 0.15 over the short term and 0.3 over the long term. While detailing raises ...

Estimating the Cost of Strategic Entry Delay in Pharmaceuticals: The Case of Ambien CR
Date Posted:Wed, 17 Jun 2015 19:02:50 -0500
With the Hatch-Waxman Act of 1984, the FDA included an unchallengeable exclusivity period for newly approved drugs, independent of patents. This potentially generates an incentive for firms to strategically delay the introduction of new versions (reformulations) of drugs until just before patent expiration of the original drug. This way the reformulated drug competes mainly with newly introduced generics of the original drug. If instead, the reformulated drug was to be introduced well before the original drug?s patent expires, the reformulated drug would compete only with the original drug. While the pattern of strategic delay is well documented in the literature, its effects on consumers and firms are not. Reformulations may increase utility through improved efficacy and through fewer doses per day or a more even molecule decay rate. However, as suggested in the press and literature, it is also possible that the adoption of reformulated products is mostly the result of advertising rather than product-related benefits. Using detailed prescribing and pricing data from the prescription sleep aid market, I document significant adoption of the reformulation Ambien CR and show that it is not only driven by advertising. I use these estimates to evaluate two different policies designed to induce earlier entry of Ambien CR. I find that there are large potential gains in consumer surplus and in revenue.

Informational Shocks, Off-Label Prescribing and the Effects of Physician Detailing
Date Posted:Wed, 17 Jun 2015 18:57:24 -0500
The relationship between pharmaceutical detailing and prescriptions for non FDA-approved (off-label) use has been the subject of regulatory scrutiny, with more than $12 billion in regulatory settlements for off-label promotion since 2004. Using the case of AstraZeneca's anti-psychotic drug, Seroquel, I study the extent to which off-label prescriptions are caused by detailing. Using a physician panel that connects detailing exposure to medical charts, I exploit within-physician variation to identify detailing effects. I find the effect of detailing on off-label prescriptions is small in both absolute and relative terms. Detailing on net tilts the prescribing distribution toward on-label.

REVISION: Estimating the Cost of Strategic Entry Delay in Pharmaceuticals: The Case of Ambien CR
Date Posted:Wed, 17 Jun 2015 10:02:50 -0500
With the Hatch-Waxman Act of 1984, the FDA included an unchallengeable exclusivity period for new approved drugs, independent of patents. This generates an incentive for firms to strategically delay the introduction of new versions of drugs until just before patent expiration of the originals in order to take market share away from new generics rather than its own original product in its time of FDA exclusivity. While there is limited clinical evidence that reformulated products have higher efficacy than the original molecules, it is possible that they provide utility through other characteristics, such as fewer doses per day or a more even molecule decay rate. However, as suggested in the press and literature, it is possible that usage of reformulated products is driven by advertising rather than any tangible benefits. Using detailed prescribing and pricing data, I document strategic delay in the prescription sleep aid market. I find that adoption of the reformulation, Ambien CR is ...

REVISION: Informational Shocks and the Effects of Physician Detailing
Date Posted:Wed, 17 Jun 2015 09:57:25 -0500
The effects of pharmaceutical firm advertising directly to physicians using sales reps, or detailing, has been a major area of interest for both regulators and firms. As firms spend vast amounts of money on detailing activities, understanding the response of such inputs is crucial to profit maximization. Regulators, on the other hand, worry that detailing might be illegally focused on off-label prescribing. In addition there is a regulatory worry that promotion will lead to prescriptions to those who do not need the drugs. Finally, regulators worry whether detailing provides socially useful information or socially harmful quid pro quo relationships. In this paper, I estimate the effect of detailing in the anti-psychotic category, a roughly $9 billion per year category which has been hit with over $6.5 billion in regulatory fines due to promotional practices in the past fifteen years. I estimate these effects using two studies that disseminated new information that drastically changed ...

REVISION: Positive Spillovers and Free Riding in Advertising of Prescription Pharmaceuticals: The Case of Antidepressants
Date Posted:Wed, 20 May 2015 06:08:21 -0500
Television advertising of prescription drugs is controversial, and it remains illegal in all but two countries. Much of the opposition stems from concerns that advertising directly to consumers may inefficiently distort prescribing patterns toward the advertised product. Despite the controversy surrounding the practice, its effects are not well understood. Exploiting a discontinuity in advertising along the borders of television markets, I estimate that television advertising of prescription antidepressants exhibits significant positive spillovers on rivals' demand. I then construct and estimate a multi-stage demand model that allows advertising to be pure category expansion, pure business stealing or some of each. Estimated parameters indicate that advertising has strong market level demand effects that tend to dominate business stealing effects. Spillovers are both large and persistent. Consistent with these spillovers, I find that firms advertise less and are less likely to ...

REVISION: Positive Spillovers and Free Riding in Advertising of Prescription Pharmaceuticals: The Case of Antidepressants
Date Posted:Tue, 14 Oct 2014 02:03:06 -0500
Television advertising of prescription drugs is controversial, and it remains illegal in all but two countries. Much of the opposition stems from concerns that advertising directly to consumers may inefficiently distort prescribing patterns toward the advertised product. Despite the controversy surrounding the practice, its effects are not well understood. Exploiting a discontinuity in advertising along the borders of television markets, I estimate that television advertising of prescription antidepressants exhibits significant positive spillovers on rivals' demand. I then construct and estimate a multi-stage demand model that allows advertising to be pure category expansion, pure business stealing or some of each. Estimated parameters indicate that advertising has strong market level demand effects that tend to dominate business stealing effects. Spillovers are both large and persistent. Using these estimates and a simple supply model, I explore the consequences of the positive ...

Positive Spillovers and Free Riding in Advertising of Prescription Pharmaceuticals: The Case of Antidepressants
Date Posted:Sun, 10 Aug 2014 10:33:10 -0500
Exploiting the discontinuity in advertising along the borders of television markets, I estimate that television advertising of prescription antidepressants exhibits significant positive spillovers on rivals' demand. I apply this identification in a demand model, where estimated parameters indicate significant and persistent spillovers driven by market expansion. Using the demand estimates to calibrate a stylized supply model, I explore the consequences of the positive spillovers on firm advertising choice. Compared with a competitive benchmark in which firms optimally free ride, simulations suggest a category-wide advertising cooperative would produce a significant increase in total advertising.

REVISION: Positive Spillovers and Free Riding in Advertising of Prescription Pharmaceuticals: The Case of Antidepressants
Date Posted:Sun, 10 Aug 2014 01:33:10 -0500
Television advertising of prescription drugs is controversial, as evidenced by the fact that it is illegal in all but two countries. Given the controversy surrounding the practice, its effects are not well understood. Exploiting the policy change making such advertising possible in the United States as well as a spatial identification at the border approach, I estimate that television advertising of prescription antidepressants exhibits significant positive spillovers on rivals' demand. I then construct and estimate a multi-stage demand model which allows advertising to be pure category expansion, pure business stealing or some of each. Estimated parameters indicate that advertising has strong market level demand effects which tend to dominate business stealing effects. Spillovers are both large and persistent. Using these estimates and a simple supply model, I explore the consequences of the positive spillovers on firm advertising choice. In a co-operative advertising campaign, ...

The Regulation of Prescription Drug Competition and Market Responses: Patterns in Prices and Sales Following Loss of Exclusivity
Date Posted:Sat, 05 Oct 2013 18:05:10 -0500
We examine six molecules facing initial loss of US exclusivity (LOE, from patent expiration or challenges) between June 2009 and May 2013 that were among the 50 most prescribed molecules in May 2013. We examine prices per day of therapy (from the perspective of average revenue received by retail pharmacy per day of therapy) and utilization separately for four payer types (cash, Medicare Part D, Medicaid, and other third party payer - TPP) and age under vs. 65 and older. We find that quantity substitutions away from the brand are much larger proportionately and more rapid than average price reductions during the first six months following initial LOE. Brands continue to raise prices after generics enter. Expansion of total molecule sales (brand plus generic) following LOE is an increasingly common phenomenon compared with earlier eras. The number of days of therapy in a prescription has generally increased over time. Generic penetration rates are typically highest and most rapid for TPPs, and lowest and slowest for Medicaid. Cash customers and seniors generally pay the highest prices for brands and generics, third party payers and those under 65 pay the lowest prices, with Medicaid and Medicare Part D in between. The presence of an authorized generic during the 180-day exclusivity period has a significant impact on prices and volumes of prescriptions, but this varies across molecules.