Measuring the safety elasticity of advertising

Abstract

This article presents theoretical evidence of an inverse relationship between the advertising elasticity of demand and the safety elasticity of advertising. It also finds that under a lower level of safety, advertising expenditure is driven directly by the responsiveness of demand to advertising.

Notes

¹ See also Atkinson (1982) and Knight (1982).

² A CBS news poll following the TWA flight 800 accident showed that about 85% of regular passengers believed that more money should be spent on airline safety even if that resulted in higher ticket fares (Cobb and Primo, 2003).

³ See for example Squalli (2005).