Measuring the Contribution of Advertising to Growth in Demand: An Econometric—Accounting Framework

Abstract

This paper attempts to explain, with the aid of an estimated econometric model of alcoholic drink demand, why there have occurred over the past few decades marked differences in the growth rates of consumption of beer, spirits and wine in the United Kingdom. The main conclusion to emerge from this exercise is that, over the sample period, advertising's role in the expansion of total alcoholic drink demand, and its changing composition, has been barely measurable in an absolute sense and certainly quite unimportant in comparison with the effect of income, especially, and to a smaller extent relative prices. That is to say, our calculations suggest that the great expansion in consumption of alcoholic drinks over the sample period, particularly of spirits and wine, owes little, if anything at all, to advertising of these products.

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