Television Advertising and Beef Demand: Bayesian Inference in a Random Effects Tobit Model

A number of recent empirical studies have generated skepticism about the effectiveness of generic advertising for beef. One of these studies, Jensen and Schroeter (1992), examines data collected from a panel of households in a carefully designed experimental test of television advertising. The present paper undertakes a reexamination of the Jensen and Schroeter data with two significant improvements in method. First, the analysis disaggregates beef purchases into three product types (ground beef, steaks and roasts) and assesses advertising's impact on the demand for each type separately. Second, the present analysis uses an improved econometric method: Bayesian inference in a random effects Tobit model. Inference is based on simulations of a posterior distribution using Gibbs sampling and data augmentation. As far as advertising's effects are concerned, the results of this analysis reaffirm the Jensen and Schroeter finding: The experimental television advertising campaign was not effective in increasing household purchases of beef.