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We found no evidence that consumers benefit from government-mandated disclaimers in advertising. Experiments and common experience show that admonishments to change or avoid behaviors often have effects opposite to those intended. We found 18 experimental studies that provided evidence relevant to mandatory disclaimers. Mandated messages increased confusion in all, and were ineffective or harmful in the 15 studies that examined perceptions, attitudes, or decisions. We conducted an experiment on the effects of a government-mandated disclaimer for a Florida court case. Two advertisements for dentists offering implant dentistry were shown to 317 subjects. One advertiser had implant dentistry credentials. Subjects exposed to the disclaimer more often recommended the advertiser who lacked credentials. Women and less-educated subjects were particularly prone to this error. In addition, subjects drew false and damaging inferences about the credentialed dentist.
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Evidence on the Effects of Mandatory Disclaimers in Advertising
With reply to commentators:
Should We Put a Price on Free Speech?
Kesten C. Green
Senior Lecturer, IGSB, University of South Australia
GPO Box 2471, Adelaide SA 5001, Australia
+61 8 8302 9097
J. Scott Armstrong
Professor of Marketing, The Wharton School, University of Pennsylvania
747 Huntsman, Philadelphia PA 19104, U.S.A.
+1 215 898 5087
Forthcoming in the Journal of Public Policy & Marketing
File: Mandatory disclaimers-final draft.docx
30 March 2012
We found no evidence that consumers benefit from government-mandated disclaimers in advertising. Experiments and
common experience show that admonishments to change or avoid behaviors often have effects opposite to those intended.
We found 18 experimental studies that provided evidence relevant to mandatory disclaimers. Mandated messages increased
confusion in all, and were ineffective or harmful in the 15 studies that examined perceptions, attitudes, or decisions. We
conducted an experiment on the effects of a government-mandated disclaimer for a Florida court case. Two advertisements
for dentists offering implant dentistry were shown to 317 subjects. One advertiser had implant dentistry credentials. Subjects
exposed to the disclaimer more often recommended the advertiser who lacked credentials. Women and less-educated subjects
were particularly prone to this error. In addition, subjects drew false and damaging inferences about the credentialed dentist.
Key words: consumer protection; corrective advertising; decision making; government regulation; judgment.
Sellers often provide disclaimers in order to inform customers about their products and to avoid lawsuits. Lawmakers and
regulators nevertheless sometimes1 impose disclaimers when they believe that sellers would otherwise fail to inform buyers.
Mandatory disclaimers are government-required messages that have the form: Product-X is [not] Y.
In this paper, we scrutinize the rationale for such restrictions on speech, examine the legal history of disclaimers in
the U.S., and review the prior experimental evidence on the costs and benefits of disclaimers. We then describe an experiment
that we conducted for a court case about a disclaimer mandated by the government of Florida.
Economic Rationale for Restrictions on Commercial Speech
The argument for mandatory disclaimers is inconsistent with economic principles and knowledge of the roles of sellers,
regulators (who sometimes stand between sellers and buyers), and buyers, as we describe below2.
It is in sellers’ economic interests to treat customers well and, especially, to avoid misleading them. They are motivated to tell
consumers about the limitations of their products in order to develop good long-term relationships with them, and to avoid the
costs of dealing with disgruntled customers and with lawsuits. Unsurprisingly, then, sellers have long used disclaimers in
advertising. Research on advertisements that tell the bad along with the good has found that they are persuasive when the
negative features are important to consumers (Armstrong 2010, pp. 124-126).
Sellers are motivated to provide warnings with products that may be dangerous in surprising ways or extents, for
example with a clear liquid that is poisonous, but not with a knife. Warnings are usually helpful. In a meta-analysis involving
12 experiments and 3 quasi-experiments involving 79 comparisons, Cox et al. (1997) found the warnings yielded an average
gain in compliance of 15.7% compared to having no warning. However, in one-third of the comparisons, the presence of a
warning had no effect, or reduced safe behavior.
1 Ben-Shahar and Schneider (2011) documented the “spectacular prevalence” (p. 647) of mandated disclosures.
2 For a review of the aspects of the economics of information that are relevant to buyer and seller behavior, see Calfee and Ford (1988).
Sellers are also motivated to provide benefits to potential customers, and to tell them about those benefits, if they are
free to do so. Consider the following examples:
Breakfast cereal companies increased fiber content and introduced advertising of the benefits of fiber when
restrictions on advertising health benefits were lifted. Consumers increased their consumption of high-fiber
cereals (Ippolito and Mathios 1991).
Women reduced their consumption of saturated fats within the fats and oils category by 24% in the five years
after advertising restrictions were lifted in 1985, a substantially more rapid change than occurred during the
preceding eight years (Ippolito and Mathios 1995).
Cigarette companies reduced tar and nicotine levels after the Federal Trade Commission’s prohibition of
comparative health claims in cigarette advertisements was lifted (Craswell 1991).
Prior to mandatory nutrition labeling, sellers were motivated to tell consumers about features of their products that
were considered to have health advantages. When a new mandatory labeling regime that restricted claims that
sellers could make was instituted, the share of healthier cooking oils sold decreased (Mathios 1998).
People are accustomed to dealing with biased information in all areas of life, including when making decisions as consumers.
When they are not expert in a product category, consumers tend to seek out independent information, use trusted suppliers, or
buy well-known brands. If customers discover they have been misled after they have purchased a product, they are likely to
avoid purchasing the product in the future, demand a refund, tell others not to buy it, post comments on the Internet, or sue.
Consumers are also aware from experience and from knowledge of human nature that government officials are
fallible, sometimes biased, and sometimes duplicitous in the information they provide. In addition, people often attribute
higher benefits to products they are told they cannot have.3 As a consequence, consumers may fail to respond to government-
mandated messages in the ways that the regulators intend them to.
While sellers in free markets are motivated to look after buyers, there will likely be some sellers who deliberately mislead
consumers in the hope of short-term profits. Such exceptions to normal market behavior are proposed as a key rationale for
regulation. Market regulators, however, face a complex problem. They must devise, implement, and enforce regulations that
increase welfare beyond that which is achieved by many individual buyers and sellerseach with different information,
preferences, situations, and tradeoffswho are engaged in many voluntary transactions. And they must do so without
violating the property and other rights of citizens.
Even with the best of intentions, the available evidence suggests that it may not be possible to increase welfare by
government regulation or information policies (see, e.g., Winston 2006, 2008 for reviews of the evidence).
In practice, the regulatory philosophy adopted by governments may not be one of welfare maximization and may
vary, thereby increasing uncertainty for sellers and confusion for buyers (Eggers and Fischhoff 2004). Regulators may also
fail to implement the wishes of elected legislators, as Emord (2000) described in relation to the Food and Drug
Administration’s (FDA’s) “arbitrary and capricious” and “virtually unbridled discretion over commercial speech” (p. 139)
restrictions on health claims about products4.
Government officials and judges face neither the direct accountability of a seller, nor the search costs and pleasure
or regret of a buyer. Instead, they face the temptation to impose their own beliefs on others, and lobbying from sellerswho
would like to restrict their competitors’ ability to communicate benefitsand from organizations with agendas hostile to the
The following examples suggest that regulators’ understanding of these complex situations may never in practice be
sufficient to ensure that regulations increase welfare.
In 1980, the FDA issued a warning that pregnant women should avoid coffee due to a risk of birth defects (Burros
1982). In 1981, researchers claimed coffee was responsible for half of all pancreatic cancers. Both claims of harm from coffee
consumption were later reversed; the pancreatic cancer claim was reversed by the original researchers. (Simon, 1996,
summarized three studies on this issue.) Researchers later claimed that coffee has net health benefits (e.g., Larsson and Orsini
The U.K. Food Safety Act of 1990 effectively outlawed the use of wooden chopping boards and utensils in
commercial kitchens in the belief that they were unhygienic. The belief was based on a study that involved the cultivation of
scrapings from wooden working surfaces taken from 211 butchers’ shops and 24 restaurants in London. The researchers
found that 4% of the cultivated samples contained salmonellae (Gilbert and Watson 1971). Government inspectors vigorously
enforced the rule causing much disruption and upset. Subsequent experimental research in 1993 designed to more realistically
3 For evidence on this “scarcity principle,” see Armstrong 2010, pp.71-74.
4 “In particular, Congress condemned the FDA's long delay (until 1996) in authorizing a health claim that associated folic acid with a
reduction in the risk of neural tube defects (a claim endorsed by the Centers for Disease Control and Prevention in recommendations to the
U.S. public in September of 1992), placing blame for preventable neural tube defect births between 1992 and 1996 squarely on the agency”
(Emord 2000, p. 140).
replicate conditions in kitchens found that wooden boards have antibacterial qualities, killing 99.9% of bacteria within three
minutes, whereas bacteria persisted on the replacement plastic boards. The ban was reversed that year (Booker and North
The user of a drug developed serious side effects and sued the manufacturer for damages claiming the manufacturer
knew about mounting evidence of the generic drug’s dangers but did not warn consumers. The manufacturer maintained that
the company was bound to stick with the mandated labeling. The Supreme Court found in Pliva, Inc. v. Mensing (2011) that
pharmaceutical manufacturers could not be held liable under state tort law for insufficiently warning consumers because
changing the warning would have breached the Federal warning label mandate.
In a review of government information policies, Winston looked at three situations that had been proposed in 2007
as examples of mandatory disclosure policies that increased welfare: Financial disclosure, mortgage lending, and restaurant
hygiene. He found no evidence that the mandated disclosures improved the situations for consumers, or that there were
problems in the first place. He concluded, “empirical evidence does not persuasively indicate that any information policy has
been effective” (p. 174) and proposed benign neglect as the appropriate response by policy makers to alleged information
problems (Winston 2008.)
Economic theory, then, suggests that in free markets sellers are motivated to treat customers well in order to make a
profit, buyers are motivated to exercise caution, and welfare tends to be maximized. In regulated markets, sellers are restricted
in their ability to serve customers, buyers are less cautious, and regulators face temptations, lack knowledge and, in practice,
lack the incentive to obtain useful scientific knowledge on the effects of proposed regulations.
Evidence on Human Behavior Relevant to Mandated Disclaimers
By mandating disclaimers, governments absolve buyers and sellers of responsibility for care and thereby encourage
irresponsibility. The presence of a government mandated message suggests that an authority has carefully reviewed the
product. The authority of a government mandated message or product feature might reassure consumers that that they are
being looked after, causing them to become less vigilant. For example, a study involving 1,307 Washington State drivers and
6,234 observations of their annual accident frequency from 1992 through 1996 found that drivers who purchased cars with
airbags and anti-lock brakes drove more aggressively to the extent that the safety benefits were much less than expected
(Winston, Maheshri, and Mannering 2006). This type of response is referred to as the risk compensation hypothesis or offset
hypothesis in the economics literature.
Consider, now, the effect of a sign posted by the U.S. National Park Service intended to discourage the theft of
petrified wood. When the sign was in place, the theft rate was nearly three times higher than when it was not5. Why? The sign
was a signal to park visitors who would otherwise not have stolen that stealing the petrified wood was a common behavior: In
this case, the social proof that fellow visitors stole wood more than outweighed the admonishment from an authority not to
steal (Cialdini 2003).
Government-mandated messages often have the purpose of changing or discouraging specific behaviors, for
example to stop smoking or to avoid overconsumption of alcohol. Experimental research on persuasion has shown that it is
hard to change or to prevent behavior. (This is also the common experience of people with teenage children and spouses.)
Mark Twain (1885) recognized that restrictions can make a product more attractive to potential consumers when his
character, “The Duke,” wrote an advertising bill including the lines “For 3 Nights Only!” and “LADIES AND CHILDREN
NOT ADMITTED,” and then said in reference to the latterThere, if that line don’t fetch them, I don’t know Arkansaw.”
Twain’s insight is consistent with the evidence on resistance to persuasion summarized in Armstrong (2010). When
consumers are told that they should not or may not do something that they are currently free to do, their desire to engage in
the behavior increases. For example, when Miami prohibited the sale, possession, and use of laundry detergents containing
phosphates, the regulation induced an artificial scarcity and resentment over the loss of freedom to choose. Consumers
responded by increasing their ratings of the effectiveness of phosphates in detergent (Mazis 1975). In another example sixty-
four subjects in a laboratory experiment were provided with statements that were said to be from a pornographic book. Half
of the subjects were also told that the book was restricted “to those 21 and over.” This substantially increased their desire to
read the book (Zellinger et al. 1975). The phenomenon is widely observed and heavily researched, and is referred to
elsewhere in the literature as reactance (Ringold 2002).
Disclaimers sometimes conflict with current behaviors or attitudes, as when consumers are informed of dangerous
side effects from smoking. When people are exposed to information that challenges their beliefs or behavior, instead of
changing they often react defensively by strengthening their current beliefs. Moreover, contrary to intuition but consistent
with evidence from cognitive dissonance studies, when people believe that disconfirming evidence is valid they tend to
reinforce their prior beliefs more fervently (see, e.g., Batson 1975).
5 Cialdini (2003) cites a theft rate of 7.92% when a sign with a “descriptive-norm” message was present, and of “just under 3%” (his Endnote
2) when no sign was present.
In a related phenomenon, advertisers sometimes use two-sided arguments. They tell about the advantages in order to
create positive beliefs about their product and then describe problems, as in the car has extraordinary performance but it is
only available in manual and changing gears requires skill. This increases the believability of their advertisements. Customers
exposed to a government mandated message might think, “Sure this product has negative aspects, but now that the
government has told me what they are I don’t have to worry that there might be some really bad problems that I don’t know
Weak counter arguments are effective at increasing demand when potential consumers are cognitive misers and
engage in relatively little effort to process an advertisement. In four experiments involving 555 subjects, the subjects initial
positive assessments of products were strengthened when they were exposed to weak negative information (Ein-Gar, Shiv,
and Tormala 2012).
Often, mandated disclaimers are irrelevant to consumers and so their presence can distract consumers from product
information that is important to them (Osterhouse and Brock 1970). Distracted consumers make inferior decisions.
Much research has been done on how to improve readership and the evidence has been summarized in the form of
principles (Armstrong 2010). For effective communication of information, message text should be large enough so that even
those with reduced vision can read it, be placed on a white background in columns and in a standard serif typeface. While
presenting text all in capitals and a bold sans-serif typeface might intuitively seem likely to emphasize a message, it actually
reduces readability and readership. Thus, disclaimers are commonly presented in ways that violate the principles and thereby
discourage readership. For audio advertisements, disclaimers are presented using fast talkers, which sounds authoritative and
saves on media costs, but is also not effective for conveying information.
The drafters of disclaimers, whether sellers or regulators, are at a disadvantage: Negative arguments and words are
more difficult to understand than positive ones.
Disclaimers increase the amount of text in an advertisement. Interestingly, there is evidence that advertisements with
more text are regarded as more believable—as in “long copy sells”even when there is no time to read it (Meyer-Hentschel
1984). Thus, by its mere presence, a disclaimer might encourage greater consumption of the product (such as taking a drug)
that the disclaimer is intended to discourage the use of.
In summary, attempts to change behavior using mandatory disclaimers are often ineffective and in many cases lead
to effects that are opposite to those intended. When the government takes more responsibility, citizens take less. Most of us do
not like being told what to do, and may rebel. We cannot justify devoting our time to details that will not affect our decisions
and we struggle to understand disclaimers when we do give them our time. 6
Legal Basis for Commercial Speech Restrictions
“Congress shall make no law…abridging the freedom of speech…”
Our reading of the First Amendment to the U.S. Constitution suggests that it establishes an unconditional right to free speech:
The right to choose for oneself what to say, and what not to say. When, in 1731, Benjamin Franklin wrote an editorial
regarding his publication of a sea captain’s advertisement containing a note that offended some of his readers7, he made no
“commercial speech” distinction in his defense of free speech. The First Amendment apparently applied without restrictions
until the late 1920s.
Thierer (2011) argued that it is not possible to make a clear distinction between commercial and other speech.
Indeed, the Supreme Court examined the difficulty of properly drawing such a distinction in Virginia State Board of
Pharmacy v. Virginia Citizens Consumer Council (1976). In their opinion in favor of prescription drug consumers who
challenged a statute that prevented pharmacists from advertising prices, the Justices stated, “we see no satisfactory distinction
between the two kinds of speech… As to the particular consumer’s interest in the free flow of commercial information, that
interest may be as keen, if not keener by far, than his interest in the day’s most urgent political debate.”
The Supreme Court has, nevertheless, created a commercial speech distinction and has ruled that such speech has
lesser First Amendment protection and can therefore be regulated. Our review of the legal basis for commercial speech
regulations (see Appendix) led us to conclude that government and the courts justify regulations on the assumption that they
protect consumers from making bad decisions. To our knowledge, there is no evidence to support that assumption, a
conclusion that was also reached in a review of mandated disclosures (Ben-Shahar and Schneider 2011).
6 A California court case involving a mandatory disclaimer ended abruptly on October 15, 2010, a day before one of us was scheduled to
testify, when the judge granted a request for a directed verdict after the State had rested its case. The lawyers making the request pointed out
to the judge that the State had not met its burden of justifying the mandatory disclaimer and that the survey experts for the State of California
had misinterpreted the disclaimer in the research that they had done to support its use. The case had been going on for 7 years (Michael Potts
and AAID v. Brian Stiger, et al. 2010).
7 The captain’s note stated, using colloquial language, that he would not provide passage on his ship to prostitutes or ministers of the Church
of England under any circumstances.
U.S. Supreme Court Justices Thomas and Ginsburg issued a dissenting opinion when the Court decided not to hear
a mandatory disclaimer case (Borgner et al. v. Florida Board of Dentistry et al. 2002). The dissenting Justices stated, “If the
disclaimer creates confusion, rather than eliminating it, the only possible constitutional justification for this speech regulation
is defeated.” The Justices said that the case presented “an excellent opportunity to clarify some oft-recurring issues in the First
Amendment treatment of commercial speech and to provide… guidance on the subject of state-mandated disclaimers”
including clarification of “the nature and the quality of the evidence a State must present to show that [a disclaimer] directly
advances the governmental interest asserted.
We suggest that, in order to obtain proper evidence, it is necessary to conduct experiments in order to predict the
effects for each and every restriction proposed. Situations change, so it would be necessary to conduct further experiments
over time to determine whether a net benefit still existed.
Prior Evidence on Government-Mandated Messages
We examine the issue of mandatory messages by looking first at whether they reduce confusion and then examine whether
they have beneficial outcomes. To address these issues, we relied on empirical, especially experimental evidence. For
complex situations such as this, findings from non-experimental studies are unreliable (Armstrong 2010, pp. 710).8 By
examining experimental evidence on the effects of mandatory disclaimers, we treat the issue as a subject for scientific
investigation rather than as a matter for voting or expert opinion. To the best of our knowledge, this is the first comprehensive
review of the evidence on mandatory disclaimers.
Our primary criterion for including a study was that it employed an experimental or a quasi-experimental design to
compare the effects of using a disclaimer versus not using one. We considered any fully disclosed study, regardless of
whether or not it was published in an academic journal.
We conducted Google Scholar, ISI, and JSTOR searches for articles or legal opinions that contained the terms
experiment and “mandatory disclaimers,” “corrective advertising” and related terms. We also examined papers that cited
key papers such as the review of corrective advertising by Wilkie, McNeill, and Mazis (1984). We also posted our working
paper on the Internet for many months and sought comments widely.
Our most successful search efforts involved contacting legal scholars and leading researchers on the topic, and
checking references from key studies.
To ensure that our summaries of the studies were accurate, we sent our paper to the authors. Their replies led to
many corrections.9 We also asked the authors whether we had overlooked evidence. Their responses helped us to find
relevant experiments.
Government-Mandated Messages Cause Confusion
Consumers often fail to understand government-mandated messages. For example, in an experiment on corrective
advertising, 83 subjects heard one of four versions of a Listerine mouthwash advertisement. Two of the four versions of the
advertisement included a U.S. Federal Trade Commission mandated disclaimer. Of the responses from the 36 subjects who
recalled a disclaimer after prompting, 39% misperceived the disclaimer in ways that harmed their assessments of aspects of
the brand that were not addressed by the disclaimer (Mazis and Adkinson 1976).
Lawyers for the Federal Trade Commission proposed two sets of three corrective advertising messages for the pain
relief drugs Excedrin and Bufferin. To test understanding of the messages, 451 subjects were given questionnaires for at least
two of the proposed statements. The proposed statements were each followed by ten choices: One or two correct
interpretations of the proposed statement, six or seven misinterpretations of the proposed statement, a “none of the above”
response, and a “don’t know” response. Only 24% of choices made by the subjects were correct interpretations of a proposed
statement (Jacoby, Nelson, and Hoyer 1982, p. 63). One reason for the result is that disclaimers typically use negative words,
and statements with negative words are difficult to understand (Armstrong 2010, p. 1856).
Berlex Laboratories, Inc. (part of Schering-Plough Corporation) had been ordered to provide a disclaimer stating
that it had no relationship with another company, Schering AG. The disclaimer said that, “Schering AG, West Germany, is
not connected with Schering-Plough Corporation or Schering Corporation, Kenilworth, New Jersey.” An advertisement with
the disclaimer was compared to one with no disclaimer, as well as to one that had a “claimer” saying the companies were
related. The 600 physician and pharmacist subjects were given as much time as they wanted, and they responded to questions
immediately after they had reviewed the advertisements. The disclaimer reduced the incorrect responses from 58% to 46%.
However, and surprisingly, the percentage of people who thought the companies were related was lower for the claimer than
the disclaimer (Jacoby and Szybillo 1994).
8 This problem is not unique to advertising. It has been found in other fields, such as epidemiology, where researchers and officials are often
misled by analyses of non-experimental data (Kabat 2008).
9 Wright and Armstrong (2008) found that academic papers often improperly summarize findings from published research, partly because
the authors had failed to read the papers they cited.
Government-Mandated Messages Have Unintended Effects on Beliefs and Behavior
FTC policy requires that remedies should correct consumers’ misperceptions, but not harm their evaluations of firms. This
does not appear to be the case in practice, however, as the following two examples show. When 58 subjects viewed a
corrective advertisement about one of a firm’s products, they reduced their ratings of unrelated products made by that firm
(Johar 1996). Similarly, in a series of five experiments, a total of 961 subjects exposed to an advertisement that included a
correction were less persuaded by subsequent advertising for a different product by the same firm and by an unrelated firm
selling a similar product (Darke, Ashworth, and Ritchie 2008).
In a lab experiment 64 subjects read “original” and “acceptable” advertisements for Firestone tires, Listerine
mouthwash, Freihofer’s bread, and Crown petroleum. The original advertisements were ones that had been judged to be
deceptive in Federal Trade Commission (FTC) proceedings. The acceptable advertisements were ones that had been modified
from the original using FTC guidelines by either eliminating or qualifying offending content. Despite the drafters’ intentions,
the “acceptable” alternative advertisements had similar effects on subjects’ beliefs as the original advertisements. The lack of
effect is not surprising in the light of the fact that none of the product attributes of concern to the FTC were considered
relevant to purchase decisions by 30 raters (Glassman and Pieper 1980).
How should patients react if they are informed that their doctor has a conflict of interest in recommending a
treatment? In two experiments involving 1,704 subjects in the role of patient, the “patients” who were exposed to a required
disclosure were less inclined to trust their doctor, to accept the recommended treatment, and to see the doctor in future, but
they worried that the doctor would believe they thought he was biased if they turned down his recommendation (Sah,
Loewenstein, and Cain 2011).
In a field experiment, approximately 200 male high school students who were exposed to warning signs stating
“DANGER, Shallow Water, You Can Be Paralyzed, NO DIVING,were found to be more likely to dive into the shallow
end of the pool than were the similar number of students who were not exposed to the sign (DeTurck and Goldhaber 1991).
In a laboratory experiment, 155 subjects exposed to an advertisement (picture of a bottle or can of alcoholic
beverage with label) with the U.S. Surgeon General’s warning displayed underneath, rated benefits as greater and risks as
lower than subjects who were given the advertisement without the warning. In addition, male subjects exposed to the warning
reported higher drinking intentions than those who were not (Snyder and Blood 1992, with a successful replication and
extension by Blood and Snyder 1993).
In another laboratory experiment, brief descriptions of 12 made-for-television films were provided to 360 subjects,
Subjects exposed to warnings that a film contained violent content more often chose a violent film than did subjects who were
not exposed to warnings (Bushman and Stack 1996).
In a test of the effect of a warning from the Surgeon General about the relationship between fat consumption and
heart disease, subjects were given a choice between full-, reduced-, and no-fat cream cheese. The 120 subjects who were
exposed to labels that included information on fat content and the warning were more likely to want to taste the full-fat cheese
than the other cheeses. The pattern was similar for the 120 subjects who were not exposed to the information and warning, but
120 subjects who were exposed only to the information on fat content were more likely to want to taste the lower fat,
allegedly healthier, cheeses. When asked to choose one of the cheeses to taste, the subjects were no more likely to taste the
lower fat cheeses when they were exposed to the Surgeon General warnings than when they were exposed only to the
information (Bushman 1998).
Three laboratory experiments involving the consumption of regular or low-fat M&Ms found that when foods were
labeled as low fat, consumers, especially overweight consumers, ate up to 50% more (Wansink and Chandon 2006). One
possible explanation is that they felt less responsible for their own health.
An experiment on perceptions about a fictitious new energy supplement among 78 current dietary supplement users
tested the effects of a warning (“Caution: Taking more than the recommended serving may result in side effects such as high
blood pressure, heart attack, or stroke”) and a disclaimer (“This statement has not been evaluated by the FDA. This product is
not intended to diagnose, treat, cure or prevent any disease”). Subjects exposed to the warning saw the product as less safe but
more effective than did those who where not exposed to the warning. Subjects exposed to the mandatory disclaimer did not
perceive the product any differently from those who were not exposed to the disclaimer. A second study, involving a diet
supplement and 199 subjects, led to the same finding: the warning was effective in changing perceptions in the intended
direction, but the mandated disclaimer was not. Indeed, among subjects who were dietary supplement users, exposure to the
disclaimer improved perceptions of the product (Mason, Scammon and Fang 2007).
To test the effect of a mandatory disclaimer, 1,471 randomly selected U.S. residents were shown football jerseys
during an interview in their homes. The respondents were shown five jerseys either with or without a disclaimer, and were
later shown a National Football League authorized jersey for comparison. The disclaimer read, “Not authorized or sponsored
by the N.F.L.”. The disclaimer had no meaningful effect on confusion, quality perceptions, or purchase preferences (Jacoby
and Raskopf 1986). The authors suggested that this was consistent with behavioral research on information processing and
the use of negative words.
In two experiments, a total of 146 subjects were briefly shown claims about health and medical matters on a
computer screen. Claims described as false were later incorrectly remembered as true. Repetition of the disclaimer inflated
this false conclusion after three days. Older adults were more prone to this “illusion of truth” memory problem (Skurnik et al.
There is evidence that an extract of “saw palmetto” berries provides relief of problems caused by noncancerous
prostate enlargement common among older men. From questioning a convenience sample of older men, Eggers and
Fischhoff (2004) found that 40% of 15 men would make choices against their best interests when exposed to a disclaimer.
This compares to only 22% of 9 men who would make poor decisions in the absence of the disclaimer.
One variation of each of a test advertisement for a mock anti-hypertensive and for a mock anti-arthritic drug were
shown to 676 subjects in groups of 20of whom about half had high blood pressure or arthritisduring a 17 ½ minute
television show. The pairs of advertisements were shown at 1 and 12 minutes into the program. Subjects were much less
aware of and knowledgeable about the benefits of the drugs when they were exposed to commercials that included federally
mandated disclosures of specific product risks than were subjects who were exposed to the commercials without the
mandated disclosures (Morris, Mazis, and Brinberg 1989).
Experimental Evidence Prepared for Court Case on Florida's Implant Dentistry Disclaimer
We conducted an experiment on the effects of the mandatory disclaimer that the State of Florida required dentists to use if
they advertised credentials from the American Academy of Implant Dentistry (AAID). We refer to it as the Florida
Mandatory Disclaimer or FMD.
All dentists licensed by the Florida State Dental Board are permitted to perform implant dentistry even though few
have received formal training in these procedures. The American Academy of Implant Dentistry program offers two
credentialsAssociate Fellow and Fellow. Each requires substantial skill-training and experience, as is described on the
AAID website10.
Treatment, Subjects, and Administration
Our experiment was designed to measure the extent to which customers comprehend the disclaimers regarding AAID
credentials and how these disclaimers affect their decisions. Given the large expenditure and the risk involved in implant
dentistry, choosing a dentist to perform implant dentistry is a decision that will typically involve serious deliberation. Thus,
consumers and purchasing agents can be expected to attend closely to advertisements and seek further information.
We pre-tested the materials with seven people. Minor modifications to the wording of some questions were made as
a result of this pre-testing.
We commissioned Gallup and Robinson to administer the experiment. Neither Gallup and Robinson, nor CRG
Global, the fieldwork firm employed by them, was aware of the purpose of the study or the identity of the study’s sponsor.
During November 2007, CRG Global interviewed a total of 317 people face-to-face in malls in Orlando, Daytona
Beach, and Fort Lauderdale. Potential subjects were screened to ensure that they were over 18 years old and were able to read
the English language materials. The interviewers approached 1,053 people in total, 599 declined to participate and 137 did not
meet the screening criteria11. CRG Global reported that there were no problems with the interviewing.
In order to simulate a high-involvement situation in a realistic way, the interviewers asked subjects to imagine they
had a friend in need of implant dentistry. CRG Global conducted the interviews in locations that provided privacy so that
subjects would not be distracted or feel rushed.
The subjects were presented with two mock Yellow Pages advertisements, each on its own card. Each
advertisement was for a single dentist (“Dr. Alan Reed” or “Dr. Barry Smith”) and both were headed “IMPLANT
DENTISTRY.” Both ads described the advertiser as a “General dentist” and carried the statement, “Implant dentistry is a
11 There is sometimes confusion in court cases about the need for randomization in the experimental design, and the issue was raised in this
case. While it is important to ensure that subjects are from the relevant population, the key issue is that the assignment to the experimental
treatments be based on a probability design. On the chance that the effect of the disclaimer might have depended on local factors, we
conducted the experiments in the area covered by the disclaimer, Florida.
For well over a century, in the social and medical sciences as well as in advertising, convenience samples have been standard
practice in experiments. When a tangible item (such as an advertisement) must be shown to a respondent, this has required face-to-face
interviews. Jacoby and Handlin (1991) found that marketing researchers used mall interviews on 95% of their face-to-face studies (the others
being door-to-door at 3% and other central locations at 2%). None of the studies used probability designs to select the subject pool. Jacoby
and Handlin also analyzed papers in academic journals that described “primary empirical research and used samples of people either
individually or in groups.” Based on a sample of 446 papers from 34 academic journals, they found that 97% of the papers used convenience
sampling to select the subject pool.
The issue of the random selection of subjects arose also in the previously mentioned Berlex Case, where a New Jersey company
was required to provide a disclaimer that they were not affiliated with a West German company with a similar sounding name. The
defendants in that case insisted on conducting a replication study using randomly selected subjects. The findings were nearly identical to
those from the study that used a convenience sample of subjects.
technique by which artificial replacement teeth are fastened to metal posts surgically implanted in a patient’s jaw bones.
Other than his name, that is the only information included in Dr Smith’s advertisement, and his advertisement was the same
for all treatments.
Dr. Reed’s advertisement, on the other hand, described him as a Fellow of the AAID and a Diplomate of the
ABOI/ID (American Board of Oral Implantology, Implant Dentistry). The information on Dr Reed’s credentials was
followed by (1) no disclaimer, (2) the Florida mandatory disclaimer, or (3) a modified disclaimer. The “no disclaimer”
variation would be illegal under Florida law. Therefore, we wrote the “modified disclaimer” variation with the objective of
causing the smallest harm to dentists who advertise AAID credentials while meeting the expressed aims of the Florida
legislature in requiring a disclaimer.
One expects an advertisement to present the seller’s strongest arguments. In the case of dentists advertising implant
dentistry services, this would include the attainment of credentials in implant dentistry. Dr. Smith’s advertisement listed no
qualification other than a DDS. Dr. Smith was therefore the less qualified of the two dentists. Because Dr. Smith did not have
formal implant dentistry qualifications, he was not obliged to include a disclaimer in his advertisement. The four
advertisements are shown in Figure 1.
Figure 1: Advertisements used in the experiment
(The disclaimers are shown below the lines)
Dr Alan Reed DDS
General Dentist
Fellow, American Academy of Implant Dentistry
Diplomate, American Board of Oral Implantology/Implant Dentistry
Implant dentistry is a technique by which artificial replacement teeth are
fastened to metal posts surgically implanted in a patient’s jawbones.
Dr Alan Reed DDS
General Dentist
Fellow, American Academy of Implant Dentistry
Diplomate, American Board of Oral Implantology/Implant Dentistry
Implant dentistry is a technique by which artificial replacement teeth are
fastened to metal posts surgically implanted in a patient’s jaw bones.
Note: Implant dentistry is not recognized as a specialty area by the
American Dental Association or the Florida Board of Dentistry. The
AAID is not recognized as a bona fide specialty accrediting
organization by the American Dental Association or the Florida
Board of Dentistry.
Dr Alan Reed DDS
General Dentist
Fellow, American Academy of Implant Dentistry
Diplomate, American Board of Oral Implantology/Implant Dentistry
Implant dentistry is a technique by which artificial replacement teeth are
fastened to metal posts surgically implanted in a patient’s jawbones.
Note: The American Academy of Implant Dentistry (AAID) provides
education, training and testing in implant dentistry. The AAID is the
oldest U.S. organization offering credentials in the field. It is
independent of the American Dental Association, which does not
provide training or certification in implant dentistry.
Dr Barry Smith DDS
General Dentist
Implant dentistry is a technique by which artificial replacement teeth are
fastened to metal posts surgically implanted in a patient’s jawbones.
After the subjects were shown the advertisements, they were asked which dentist (Reed or Smith) they would
recommend to their friend.
In roughly half of the interviews, the interviewer collected the advertisements before the subjects were questioned
about their understanding of the ads. The numbers of subjects for each treatment are shown in Table 1.
Table 1: Number of subjects by treatment
Ads collected
before questions?
Subjects were next asked which of the two dentists they thought had the better implant dentistry qualifications. This
was an alternative way of asking which of the two dentists would be the best one to perform implant dentistry on their friend.
Finally, subjects were asked demographic questions.
Effects of the Florida Mandatory Disclaimer on Consumers’ Decisions
When the advertisement for the AAID-credentialed dentist did not include a disclaimer, 13% of subjects said that they would
recommend the other dentist who had no apparent qualifications for implant dentistry. When the advertisement for the AAID-
credentialed dentist included the Florida mandatory disclaimer (FMD), 21% said that they would recommend the dentist
without implant dentistry credentials. Thus, the FMD led to 1.6 times as many inferior decisions (Table 2).
Table 2: Effects of Florida’s Mandated Disclaimer (FMD) on the percentage of
subjects who recommended the less-qualified dentist (n = 317)
No Disclaimer
Subject characteristics
by x times
All subjects
No college degree
College degree
Among those who did not see a disclaimer, 12% of subjects without and 13% of those with a college degree would
recommend the less-qualified dentist. Among those who did see the FMD, 25% of the less-educated subjects would
recommend the less-qualified dentist, in contrast to 16% of the better educated said they would do so. In other words, the
disclaimer was especially harmful to those with less education.
Prior research shows that for high-involvement products, advertisements should contain only material that is
relevant to consumers’ decisions (Armstrong 2010). Given that the disclaimer provides information on organizational
arrangements among the AAID, American Dental Association, and Florida Board of Dentistry only, it is hard to see why it
would be relevant to potential customers or to anyone advising them. This is consistent with the observation of Justices
Thomas and Ginsburg in their dissent on an earlier AAID case that “the mandated disclaimer is likely to foster more
confusion (Borgner et al. v. Florida Board of Dentistry et al. 2002).
Effects of Involvement
We used two additional ways to encourage subjects to process the advertisements carefully, as they would do in a high-
involvement situation.
Long-Exposure: Subjects Who Retained The Advertisements
Half of the subjects were allowed to retain copies of the advertisements while they answered our questions. Ironically, those
who retained the advertisement that included the FMD were much more likely to be confused about the AAID’s role and
standing. Substantially larger proportions of those who retained the advertisement agreed with three false statements
regarding the AAID’s credibility (Table 3). In other words, the longer subjects were exposed to the advertisements containing
the FMD, the greater their level of confusion. Note that the AAID is a bona fide credentialing organization that confers
credentials only after extensive training and experience. The defendants in the court case did not challenge this.
Table 3: Effect of retaining the advertisement including
the Florida Mandatory Disclaimer on perceptions about AAID credibility
Agreed with
incorrect statement
False Statements
Not a bona fide credentialing organization
Some accredited members not properly trained
Special training not necessary for good implant dentistry
Retesting After Subjects Reflected On Their Understanding
To test whether additional time and examination would reduce confusion, we asked subjects a second time to choose between
the dentists after they had answered the questions dealing with their understanding of the advertisements. This time we asked
them which dentist they thought was better qualified to do implant dentistry.
Among subjects who were shown the FMD, 19% recommended the less qualified dentist, compared to 12% of
those not shown the disclaimer. These responses correspond closely to the earlier results on recommendations of 21% and
13% respectively.
Among subjects who received advertisements with the FMD, 16% of those who returned the advertisements before
answering our questions to assess understanding thought the dentist with no apparent qualifications specific to implant
dentistry was the better qualified, compared with 22% of those who retained the advertisements. In other words, time for
reflection led to more confusion.
Effects of a Modified Disclaimer on Consumers’ Decisions and Confusion
We examined the extent that protection for consumers might be provided by a modified disclaimer. We tested one possibility
(shown in Figure 2) that we expected would lead to less confusion than the Florida mandated disclaimer. It suffered from the
inclusion of a negative word, a problem that we were not able to overcome while adhering to the State’s aims for the
Figure 2: Modified AAID Disclaimer
The American Academy of Implant Dentistry (AAID) provides education, training and
testing in implant dentistry. The AAID is the oldest U.S. organization offering
credentials in the field. It is independent of the American Dental Association, which
does not provide training or certification in implant dentistry.
Of those subjects given an advertisement including the modified disclaimer, 15% recommended the dentist with no
qualifications. While this is less than the 21% for those who had received the FMD, it is higher than the 13% for those given
no disclaimer. Thus, although the modified disclaimer was less harmful to subjects’ decision making than the FMD, it did not
eliminate the harm.
Effects of Mandatory Disclaimer on Sellers
Confusion about aspects of the AAID’s credibility was higher among subjects who had received the FMD than it was among
those who had not. Indeed, 48% of those who were exposed to the FMD agreed or agreed strongly that the AAID was “not a
bona fide credentialing organization” whereas 36% of those who were not exposed to the FMD believed this.
Because the disclaimer unjustly damages the reputation of the AAID, the FMD also harms individual providers who
have AAID credentialswhich, in the long run, could cause further harm to consumers by reducing the motivation of
dentists to improve their skills in implant dentistry.
Discussion on the Role of Evidence to Support Mandatory Disclaimers
Mandated disclaimers are not free. The costs are passed on to consumers as higher prices and higher taxes. Higher costs lead
people, especially the poor, to consider inferior substitutes, such as balancing on chairs rather than buying a ladder. It is
reasonable to ask for evidence of benefits that are greater than these and other costs to support the imposition of a mandatory
disclaimer. We have been unable to find a single instance of a mandatory disclaimer for which the criterion of experimental
evidence of net benefit was met. We therefore expect that applying that criterion to each proposed restriction of commercial
speech would, if applied properly, eliminate mandatory disclaimers.
In practice, however, the “commercial speech” distinction is a tenuous one and the process of putting up evidence
and fighting for it in the courts is expensive. When regulators, legislators, interest groups, and business opponents wish to
restrict speech, they will be motivated to identify an economic interest on the part of a speaker. That would not be hard to do.
Those with an interest in restricting the speech could then call for regulation by constructing an argument that net welfare will
increase if the speech is restricted.
Shortly before we submitted our final version of this paper, we learned of a review of the evidence on the related
policy of mandated disclosures (Ben-Shahar and Schneider 2011). Their review covered not only advertising but also other
areas including Miranda rights, informed consent, and Institutional Review Boards. The issue of mandatory disclosures might
seem less contentious than mandatory disclaimers as it involves simply providing more information to those who might find it
useful. Indeed, mandated disclosures are widespread and enormous sums are spent with the intention of making them useful.
In their wide-ranging review of the evidence presented in court cases and in the social science literature, however, the authors
found that mandated disclosures seldom provided clear explanations. When consumers do read themtypically they do
notthey become confused. In those rare situations when they are not confused, they are unlikely to remember the
information, or, if they do, they rarely use it properly. Ben-Shahar and Schneider were unable to find a single mandatory
disclosure for which the benefits were shown to outweigh the costs.
When disclosures are shown not to work, regulators try to solve the problem with different (typically longer)
disclosures. These efforts to improve disclosures lead to greater harm. Ben-Shahar and Schneider explained that the mandated
disclosures fail because they are based on false assumptions about how people make decisions, and they require a chain of
unlikely achievements by lawmakers, disclosers, and disclosees12. As in our study, the efforts of lawmakers and regulators to
improve upon the functioning of markets were shown to be “fatal conceits”13.
Experimental evidence is consistent with economic theory and prior research on consumer behavior in finding that
mandated disclaimers disrupt the functioning of markets. Disclaimers confuse customers, and cause them to be less vigilant
when they make decisions. Disclaimers restrict the ability of sellers to provide customers with important information about
their products and lead them to follow rules set by officials with inferior knowledge of the market. Moreover, the existence of
mandatory disclaimers as a policy option encourages lobbying of politicians and regulators by competitors and by interest
Disclaimers can provide important information to consumers and they have been widely used since the beginning of
advertising. Our concern in this paper has been only with the special case of mandated disclaimers.
We found that the laws that restrict speech identified as “commercial” with mandates rest on unrealistic economic
assumptions about the motivations and behaviors of consumers, business managers, and government officials. Moreover, we
found experimental evidence from behavioral research on persuasion that mandatory disclaimers are unlikely to influence
consumers in the ways that drafters intend and are likely to influence them in unexpected and detrimental ways.
We then examined evidence from 18 experimental studies related specifically to mandatory disclaimers. In all cases
the mandatory disclaimers caused confusion among consumers. Mandated messages increased confusion in all, and were
ineffective or harmful in the 15 studies that examined perceptions, attitudes, or decisions.
To date, then, mandatory disclaimers have been imposed at the discretion of officials in contravention of economic
understanding, in violation of research on persuasion, and in the face of direct experimental evidence showing that they are
Mandatory disclaimers fail to meet the criterion suggested by Justices Thomas and Ginsburg on “the nature and the
quality of the evidence a State must present to show that [a disclaimer] directly advances the governmental interest asserted”
(Borgner et al. v. Florida Board of Dentistry et al. 2002). We suggest an extension to the Thomas and Ginsburg
criterion: A mandatory disclaimer should be considered only if experiments demonstrate that it will give rise to net
long-term benefits without causing serious harm to any buyers or sellers. Such a test properly applied would likely
end the use of mandatory disclaimers.
12 They ask readers to imagine that they were a doctor whose duty is to inform a patient of the use of a drug when it has 26 side effects such
as heartburn, stomach ulcers, hepatitis, inflammation of skin, itching, life-threatening allergic reactions, and so on. Which side effect would
you describe? All? The most likely? The most serious? Would your answer differ if you had seen evidence that this drug kills between 3,000
and 10,000 people per year in the US? Would your answer change if you knew that the drug is aspirin?
13 F. A. Hayek wrote in The Fatal Conceit, “The curious task of economics is to demonstrate to men how little they really know about what
they imagine they can design.”
We used this extended criterion to re-examine the Florida mandatory disclaimer that was the subject of Borgner v.
Florida Board of Dentistry. Our experiment showed that the disclaimer confused potential customers, led them to make poor
decisions, and unfairly harmed sellers. The judge found our evidence compelling (Ducoin v. Viamonte Ros 2009).
By considering the costs and benefits, however, free speech becomes in practice conditional on the opinions of
courts and regulators as to whether there is sufficient evidence that a particular speech restriction would increase welfare.
They may even decide that the increase of one group’s welfare was more valuable than the consequent loss in another’s. Free
speech then ceases to be a right, as commonly understood and as intended by the First Amendment, but becomes instead an
uncertain privilege subject to the opinions of courts and government regulators.
Acknowledgments: Kay A. Armstrong and Don Esslemont aided in the design of the experiment and commented on various
drafts of this paper. We are grateful to Omri Ben-Shahar, Eli Cox, Myron (Mike) Glassman, Ronald Hill, Jacob Jacoby,
Philippe Jacquart, Alan Mathios, Ian Skurnik, Brian Wansink, and Malcolm Wright for helpful comments on drafts of the
paper, and to Frank R. Recker (who represented the AAID in the cases we refer to) and Paul Sherman for helpful suggestions
on the legal aspects of the paper. We thank the authors of papers we cited for confirming our summaries of their findings and
for suggesting improvements. Our acknowledgments are not intended to imply agreement with any opinions expressed in the
paper. Gabriel Fineberg, Jennifer Kwok, Kelsey Matevish, and Kevin Stawicki edited the paper. Responsibility for errors or
omissions in the paper belongs to the authors.
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Commercial Speech Restrictions in U.S. Law
The First Amendment to the U.S. Constitution states: “Congress shall make no law…abridging the freedom of speech…”.
The notion that speech should be subject to a government cost-benefit analysis and judicial opinion strikes us as contrary to
the principle of free speech as we understand it and as Benjamin Franklin expounded it.
The States ratified the U.S. Bill of Rights, which includes the First Amendment to the Constitution, on 15 December
1791. Two-hundred-and-twenty years later, in R.J. Reynolds v. FDA (2012), the judge upheld what has become a more
limited right to speech by granting an injunction against the FDA. Judge Leon granted the injunction, and later granted the
plaintiffs’ Motion for Summary Judgment, on the basis that the FDA rule requiring tobacco companies to display disturbing
color graphic images on the top 50% of the front and back of cigarette packets was, in “substantial likelihood,
unconstitutionally compelled speech. He found the images did not constitute “purely factual and uncontroversial information
narrowly tailored for the purpose of informing consumers, but amounted to government advocacy.
The government advocacy in this tobacco case involved tampering with images in order to upset viewers.
Presumably it would be illegal for a firm to mislead consumers in this way. Judge Leon noted that the government did not
provide relevant scientific evidence. In November 2011, we sent an email request to the FDA asking for its evidence that the
new packaging regulations would result in a net social benefit. A copy of our request can be found online14. Our requests
were met with courteous replies, but scant substantive evidence. We were referred to the Federal Register pages 36628 to
36777 for evidence15 and were told that no experimental evidence was available. A key statistic, the percentage reduction in
smoking was based on a single comparison between Canada, in which a similar graphic warnings policy had been enacted in
2001, and the U.S., in which the policy had not been enacted.
Early Commercial Speech Restrictions
Compelled speech in the form of mandatory warnings was introduced in the U.S. in 1927 with the Federal Caustic Poisons
Act (FCPA). Egilman and Bohme (2006) reported that prior to the Act, poisons were sold in bottles of unusual shapes, colors,
and textures (they showed an image of a dark-blue skull-shaped bottle) in order to warn consumers, including the blind and
illiterate, that the contents were dangerous.
After the passage of the FCPA in the U.S., manufacturers shifted to plain bottles in order to display the mandated
warning label. The authors observed that the pre-FCPA bottles were more effective at protecting at least some people. The
FCPA created the agency which three years later became known, as it is currently, as the Food and Drug Administration.
Exceptions that limited freedom of speech identified as commercial began to be made following Valentine v.
Chrestensen (1942). The U.S. Supreme Court justices ruled that a New York City ordinance that was used to prohibit the
owner of a submarine from distributing advertising material (handbills) on the streets was not a violation of the First
Amendment right to free speecheven when the material included a statement of political protest and no prices. Prior to this
opinion, the court did not make a commercial speech distinction (Boedecker, Morgan and Wright 1995).
Having created a commercial speech exception to free speech rights, the Supreme Court did not specifically uphold
the right to disseminate “truthful and nonmisleading commercial messages about lawful products and services” until 1975.
Subsequent judgments provided further clarification of this limited right (Boedecker, Morgan and Wright 1995; 44
Liquormart Inc. v. Rhode Island 1996, 496). In contrast, citizens, consumer groups, and lobby groupswhich often speak
against commercial interests in order to further their ownhave First Amendment protection to speak about products;
protection that is denied to firms, even to the extent that Nike was denied the right to speak in its own defense against media
coverage of lobbyists (Shugan 2006).
The Central Hudson Test of Commercial Speech Restriction, and Subsequent Developments
Recall that in Virginia State Board of Pharmacy v. Virginia Citizens Consumer Council (1976), the Supreme Court Justices
stated, “we see no satisfactory distinction between the two kinds of speech…As to the particular consumer’s interest in the
free flow of commercial information, that interest may be as keen, if not keener by far, than his interest in the day’s most
urgent political debate.”
Despite the Justices’ own concerns about the practical difficulties of holding to the concept of a commercial speech
distinction, the Supreme Court did not abandon the concept. Instead, from 1980 the Court provided guidelines for making the
distinction in ways that further reduced freedom by allowing considerable discretion to governments and courts to judge the
importance of regulating the speech in question (Boedecker, Morgan and Wright 1995).
In Central Hudson v. Public Service Commission of New York (1980) the Supreme Court set out the requirements
that must be met in order to warrant government regulation of commercial speech. Namely, there must be a substantial
government interest that might be served by a restriction on speech, the regulation of the speech must directly advance that
interest, and the restriction of speech must be no greater than is necessary to serve that interest. While concurring with the
15 Available online at
judgment, Justices Brennan, Blackmun, and Stevens variously argued that the Court’s definition of commercial speech
encompassed speech “entitled to the maximum protection afforded by the First Amendment” (Stevens) and that the speech
test was too permissive of government regulation.
In relation to mandatory disclaimers and warnings, the U.S. Supreme Court stated, “We do not suggest that
disclosure requirements do not implicate the advertiser’s First Amendment rights at all. We recognize that unjustified or
unduly burdensome disclosure requirements might offend the First Amendment by chilling protected commercial speech. But
we hold that an advertisers rights are adequately protected as long as disclosure requirements are reasonably related to the
State’s interest in preventing deception of consumers” (Zauderer v. Supreme Court of Ohio 1985). Justices Brennan and
Marshall elaborated that the State must “demonstrate that the advertising either ‘is inherently likely to deceive’ or must muster
record evidence showing that ‘a particular form or method of advertising has in fact been deceptive’… and it must similarly
demonstrate that the regulations directly and proportionately remedy the deception.” The Justices also noted that compelling
the publication of information that is large in quantity relative to the advertiser’s information “would chill the publication of
protected commercial speech and would be entirely out of proportion to the State's legitimate interest in preventing potential
In SUNY v. Fox (1989), the Supreme Court weakened the Central Hudson condition that regulation of speech
should be “not too extensive”, requiring instead only that regulation should be “reasonable” and noted that it would not hold
government regulation of commercial speech to the “least restrictive means,” as the dissenting Justices argued was required
under Central Hudson.
The Florida Department of Business and Professional Regulation reprimanded a lawyer for “false, misleading, and
deceptive” advertising for advertising her Certified Public Accountant (CPA) and Certified Financial Planner (CFP)
credentials (Ibanez v. Florida 1994). In this case, which parallels the Ducoin v. Viamonte Ros (2009) case for which we
conducted our research, the CFP credential was conferred by a private organization and the Department required Ibanez to
display a form of the Florida Mandatory Disclaimer. The Supreme Court held that the Board’s censure of Ibanez was
“incompatible with First Amendment restraints on official action.” In particular, the Court rejected the requirement for a
disclaimer on the grounds that hypothesized possible deception was not sufficient grounds for rebutting “the constitutional
presumption favoring disclosure over concealment.” Further, Justice Ginsburg observed that “the detail required in the
disclaimer currently described by the Board effectively rules out notation of the ‘specialist’ designation on a business card or
letterhead, or in a yellow pages listing.”
Over the years since the review by Boedecker, Morgan and Wright (1995), more than a dozen U.S. Supreme Court
decisions have cited the key Central Hudson judgment, and seven of these were germane to this paper.
In Rubin v. Coors (1995), Coors Brewing sought to include alcohol content on bottle labels. The government sought
to restrict Coors speech in order to keep consumers ignorant of the alcohol content of beer, evidently for the sake of their own
protection. The Justices found the Federal Alcohol and Tobacco Administration Act clause that prohibits that practice violated
the First Amendment right to free speech, because it failed the Central Hudson test. Justice Stevens concurred that the
labeling ban was unconstitutional but, in a dissenting opinion, claimed that the Central Hudson test was not relevant when the
legislation was a plain attempt to suppress truthful information that was of interest to consumers.16
The Supreme Court found that a Florida Bar rule that prohibited injury lawyers from sending direct mail solicitation
to victims or their relatives before 30 days after the accident or disaster passed the Central Hudson test for the restriction of
commercial speech and did not therefore violate the First Amendment (Florida Bar v. Went For It 1995). The Florida Bar
rule was based on surveys of public opinion, complaints, newspaper editorials, concerns that victims should not be exposed to
invasion of privacy and undue influence, and concerns that the reputation of the legal profession was harmed by the practice
of soliciting recent victims. In the opinion of the Court, delivered by Justice O’Connor, the nature of evidence that is needed
to satisfy the Central Hudson test is at the discretion of the Court, and may be none. The Court was concerned not so much
with whether harm was inflicted on the recipients of the advertising material, who could easily make the short trip from
mailbox to trashcan, but with the potential damage to the reputation of the legal profession.
Justice Kennedy’s dissent, with Justices Steven, Souter, and Ginsburg joining, was scathing of the majority opinion
upholding the prohibition. He wrote, “This scheme makes little sense. As is often true when the law makes little sense, it is
not first principles but their interpretation and application that have gone awry.” He concluded:
Today’s opinion is a serious departure… from the principles that govern the transmission of
commercial speech. The Court’s opinion reflects a new-found and illegitimate confidence that
it… knows what is best… Self-assurance has always been the hallmark of a censor. That is
why under the First Amendment the public, not the State, has the right and the power to decide
what ideas and information are deserving of their adherence.
In 44 Liquormart Inc. v. Rhode Island (1996), the Court followed Rubin v. Coors and found that the government of
Rhode Island had violated the First Amendment protection of free speech by banning the advertising of alcoholic beverage
prices. All Justices concurred but differed in their reasoning. Delivering the Court’s opinion, Justice Stevens drew a
distinction between State regulation of commercial messages for the purpose of protecting or informing consumers and the
16 The same legislation required disclosure of alcohol content on wine and spirit labels.
complete prohibition on disseminating truthful and non-misleading commercial messages for other reasons. He argued that
the latter situation provided “far less reason to depart from the rigorous review that the First Amendment generally demands”
(p. 501). Justice Stevens warned that commercial speech bans typically rested solely on the paternalistic premise that people
will respond “irrationally” to the truth and need to be kept in the dark for their own good. He further warned that banning
speech would conceal the government policy from the public and hence from debate. Justice Stevens rejected the State’s
claim that commercial speech about “vice” products were not entitled to First Amendment protection, pointing out that such
an exception would allow state legislatures to impose censorship on lawful activities by characterizing them as vices.
Justice Thomas argued that the government has no legitimate interest in keeping purchasers ignorant in order to
manipulate their choices, and therefore the Central Hudson test did not apply. Moreover, Justice Thomas professed
skepticism over making a commercial speech distinction: “I do not see a philosophical or historical basis for asserting that
‘commercial’ speech is of ‘lower value’ than ‘noncommercial’ speech” (p. 522). He pointed out that application of the
Central Hudson test, as interpreted by Justices Stevens and O’Connor in this case, would stop the government from restricting
commercial advertising except where it outlaws or otherwise restricts the transactions themselves, because these measures
would more effectively achieve the government purpose.
Justice Scalia shared Justice Thomas’s “discomfort with the Central Hudson test” as seeming to “have nothing
more than policy intuition to support it” (p. 517). Justice Thomas observed that the Central Hudson test is difficult to apply
uniformly, given that it is subject to individual judicial preferences and judges opinions as to which situations citizens cannot
be trusted with information on and for which products consumption should be discouraged. He suggested a return to the
holding of Virginia Board of Pharmacy (1976).
In Greater New Orleans Broadcasting v. U.S. (1999), Justice Stevens presenting the opinion of the Court
acknowledged the difficulty of applying the Central Hudson test and that there were calls for its replacement by “a more
straightforward and stringent test for assessing the validity of governmental restrictions on commercial speech.” The Court,
however, decided that it was not appropriate to tackle the broader constitutional issue when the test provided “an adequate
basis for decision” for the case before it.
In presenting the Court’s opinion on Lorillard Tobacco Co. v. Reilly (2001), Justice O’Connor suggested that the
Court’s established position on the Central Hudson test’s requirement for empirical data to support regulation of commercial
speech is not an onerous one, but can be met with “studies and anecdotes” from different situations, or even “history,
consensus, and ‘simple common sense.’” In respect to the cost-benefit test, the Court maintained that, “A careful calculation
of the costs of a speech regulation does not mean that a State must demonstrate that there is no incursion on legitimate speech
interests, but a speech regulation cannot unduly impinge on the speaker’s ability to propose a commercial transaction and the
adult listener’s opportunity to obtain information about products.”
In his partial concurrence, Justice Thomas reasserted his opposition to drawing a commercial speech distinction, as
he also did in Greater New Orleans Broadcasting v. U.S. He restated his position that there is no historical or philosophical
basis for assigning commercial speech a lower value than other speech and adding that it is doubtful “whether it is even
possible to draw a coherent distinction”. On the question of whether tobacco is a product that is so exceptional as to be outside
any First Amendment consideration, Justice Thomas concluded his opinion with the following uncompromising statement
about the intended scope of the First Amendment:
No legislature has ever sought to restrict speech about an activity it regarded as harmless and inoffensive.
Calls for limits on expression always are made when the specter of some threatened harm is looming. The
identity of the harm may vary. People will be inspired by totalitarian dogmas and subvert the Republic.
They will be inflamed by racial demagoguery and embrace hatred and bigotry. Or they will be enticed by
cigarette advertisements and choose to smoke, risking disease. It is therefore no answer for the State to say
that the makers of cigarettes are doing harm: perhaps they are. But in that respect they are no different
from the purveyors of other harmful products, or the advocates of harmful ideas. When the State seeks to
silence them, they are all entitled to the protection of the First Amendment.
Pharmacists who wished to advertise that they could supply drugs in compounded and other convenient forms for customer
had their right to do so affirmed by the Supreme Court in Thompson v. Western States Medical Center (2002). Justice
O’Conner, delivering the majority opinion of the Court noted, “We have previously rejected the notion that the Government
has an interest in preventing the dissemination of truthful commercial information in order to prevent members of the public
from making bad decisions with the information.” In a dissenting opinion, Justices Breyer, Stevens, and Ginsburg maintained
that the Court’s opinion had given insufficient regard to the government’s role as protector of consumers from untested
products, citing evidence that physicians believe that advertising leads consumers to pressure them to prescribe drugs they
would not otherwise prescribe. The dissenting justices argued that commercial speech should be subject to government policy
objectives and to less rigorous First Amendment protection.
In Milavetz, Gallop and Milavetz. v. United States (2010), the Court upheld a requirement for lawyers who offer
bankruptcy advise or assistance to include in their advertisements notice that their operation is a “Debt Relief Agency” that
“helps people file for bankruptcy”. The plaintiffs claimed that these statements would cause confusion among consumers, but
did not offer evidence. The majority opinion, delivered by Justice Sotomayor, held that the likelihood that consumers would
be misled if the mandated statements were absent was self-evident.
Should We Put a Price on Free Speech?
J. Scott Armstrong
Kesten C. Green
Should public policy guarantee First Amendment rights to all citizens, at all times? Some of our commentators think not. We
argue there is good reason to hold to rights.
Consistent with economic theory and behavioral research, experimental findings show that mandatory disclaimers
harm producers and consumers. They are also expensive to develop and to enforce.
Perry and Blumenthal (in this issue) show that similar problems exist with respect to the broader area of mandatory
disclosures. Their findings conflict with the common assumption that “more information is better,” and demonstrate that
confusion occurs even when negative words can be avoided. The problem is that people are overwhelmed with information
that has little relevance to their decision-making. We do not agree with their statement that experimental evidence is
“necessary to examine the effects of disclosures on decision quality and to improve public policy and consumer protection.”
The burden of proof should be on those who would deny the right of free speech. Furthermore, sufficient experimental
evidence exists, and it favors retaining free speech.
Taylor and Capella (in this issue), provide a wide-ranging and useful literature review. Then they take a similar
position as Perry and Blumnethal, stating, “a wholesale moratorium on mandatory information provision appears
unwarranted.” They base this statement on the argument that “sound disclosure is grounded in the public’s right to know and
corporate ethics.” They do not, however, provide any experimental evidence to support their argument or their implicit
assumption that government lawmakers and enforcers will behave more ethically than people working in firms.
We encountered a similar status quo bias among some of the people who provided unpublished comments on our
paper. We are not sure why we have to prove to them that it is wrong to deprive business people of First Amendment rights.
And we are not sure how it would be possible to do so: they were unable to tell us what evidence would convince them.
Normally it is up to the government to prove the case beyond a reasonable doubt when trying to take away a person’s
freedom, say by putting them in jail.
As is shown by Sherman (in this issue), courts have been lax in supporting free speech. They have assumed that
government restrictions on free speech are of obvious benefit and thus need no support from evidence. There are exceptions,
of course, as in Judge Leon’s blocking of the FDA’s attempt to force tobacco sellers to use visuals (some of which were
falsified) and text to persuade people to stop smoking. In that case, the government, armed with an enormous budget, failed to
provide experimental evidence to support the imposition of speech restrictionsi.
In the spirit of evidence-based policy, it would be reasonable to ask that each restriction on speech must be shown
beyond a reasonable doubt to confer benefits that are greater than all the costs. Because things change, it would also be
reasonable to ask that the case be made again, say every five years, with the same requirement for rigorous evidence.
While it is reasonable to ask for comprehensive cost-benefit analyses for government policies, we wonder whether
it is proper to conduct cost-benefit analyses for the right to free speech. Should we consent to our governments going through
each right in the Bill of Rights and decide whether the potential dangers of freedom outweigh the benefits? To do so would be
to ignore the years of struggle and lives spent to obtain and retain basic freedoms. Our ancestors put great value on these
freedoms. It seems naïve to think they were wrong to do so.
Since we were unable to find experimental evidence to support even one successful use of a mandatory disclaimer
over the roughly 70 years and thousands of applications of this policy in the U.S., we conclude that conducting cost-benefit
analyses would support the right to free speech. However, conducting comprehensive and open analyses is enormously
expensive, while holding to established rights of free speech is, as they say, “free.
i R.J. Reynolds Tobacco Co et al. v. U.S. Food and Drug Administration et al. (2012), U.S. District Court for the District of Columbia, No.
11-cv-1482. [Available from]
... [16][17][18] Evidence to date with other consumer product advertising indicates that disclaimers are largely ineffective. [19][20][21][22] If disclaimers are uniquely effective for cigarette ads, they could be a way for companies to freely communicate without misleading the public. However, if the disclaimers are not effective and the public is still being misled, further remediation is needed, such as a ban on advertising claims. ...
... Participants were from a national panel of U.S. adults (n = 5,014) initially recruited in 2014-2015 for a study by the UNC Center for Regulatory Research on Tobacco Communication. 24 For the current study, in October 2015, the Carolina Survey Research Laboratory invited all young adults (ages [18][19][20][21][22][23][24][25], all smokers, and a randomly selected subset of adult (25+) non-smokers from the previous study to participate in a follow-up survey (n = 2,570). Data collection lasted three months with nonresponders contacted up to three times through mailed, emailed and telephone reminders. ...
Introduction: The U.S. Tobacco Control Act restricts advertising or labeling that suggests one tobacco product is less harmful than another. We sought to examine how "organic," "natural," and "additive-free" advertising claims and corresponding disclaimers affect perceptions of cigarettes' harm. Methods: Participants were a national probability sample of adults in the U.S. (n = 1,114, including 344 smokers). We conducted a 5 (claim) × 2 (disclaimer) between-subjects factorial experiment. Participants viewed a Natural American Spirit cigarettes ad claiming they were "organic," "natural," "additive-free," "light," or "regular;" and with or without a corresponding disclaimer. The outcome was perceived harm of the advertised cigarettes. Among smokers, we also assessed interest in switching within their current brand to cigarettes with this characteristic (e.g., "additive-free"). Results: Claims in the ad had a large effect on perceived harm (Cohen's d = 0.87, 95% CI: 0.47-1.29). Claims of cigarettes being "organic," "natural," or "additive-free" reduced perceived harm from the advertised cigarettes, as compared to "regular" and "light" claims. Disclaimers had a small effect, increasing perceived harm (d = 0.25, 95% CI: 0.08-0.41). The problematic claims also increased smokers' interest in switching. Disclaimers had no effect on smokers' interest in switching. Conclusions: "Organic," "natural," and "additive-free" claims may mislead people into thinking that the advertised cigarettes are less harmful than other cigarettes. Disclaimers did not offset misperceptions of harm created by false claims. The U.S. Food and Drug Administration should restrict the use of these misleading claims in tobacco advertising.
... Korean-Language advertising the planner's conflict of interest was disclosed (Carmel et al., 2015). Furthermore, disclosures sometimes fail to increase caution regarding marketing claims (Green and Armstrong, 2012;Zokaityte, 2016). Thus, more research is required to examine the influence of message factors (e.g. ...
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Purpose Government policy mandates information disclosure in financial communications to protect consumer welfare. Unfortunately, low readability can hamper information disclosures’ meaningful benefits to financial decision making. Thus, this experiment tests the product evaluation and decision satisfaction of Korean consumers with less or more subjective knowledge and with or without personal finance education. Design/methodology/approach A between-subjects experiment examined responses of a nationally representative sample of 400 Korean consumers toward a Korean-language credit card advertisement. Findings Financial knowledge improves financial product evaluation and decision satisfaction. More readable disclosures improved evaluation and satisfaction among less knowledgeable consumers. Less readable disclosures did not. Consumers without financial education exhibited lower evaluations and decision satisfaction regardless of readability. More knowledgeable consumers and those with financial education performed equally well regardless of disclosure readability. Practical implications Financial service providers seeking more accurate evaluations and better decision satisfaction among their customers should use easier-to-read disclosures when targeting consumers with less prior financial knowledge. Social implications One-size-fits-all financial communications are unlikely to achieve public policy or consumer well-being goals. Government-mandated information should be complemented by augmenting financial knowledge and providing personal finance training. Originality/value Although almost a quarter of the world’s population lives in East Asia, this is the first examination of readability in disclosures written in East Asian characters rather than a Western alphabet. Previous readability research on Asian-originating financial disclosures has been conducted on English-language texts. This study extends knowledge of readability effects to growing East Asian markets.
... One option for regulation could include requiring a disclosure statement on fruit drinks. However, many studies have shown that disclosures are generally ineffective and do not correct misperceptions (Baig et al., 2018;Green and Armstrong, 2012;Kesselheim et al., 2015). A likely more effective regulatory action would be banning the use of specific misleading claims (similar to a 2010 ban of the use of misleading terms such as "light" on cigarette packaging). ...
We aimed to examine the impact of claims, fruit images, and health warnings on consumers' perceptions of fruit-flavored drinks with added sugar (i.e., "fruit drinks"). We conducted three 2x2x2 randomized experiments with online convenience samples of U.S. adults (Study 1 n = 2139 in 2018, current e-cigarette users and smokers; Study 2 n = 670 in 2018, current e-cigarette users; Study 3 n = 1001 in 2019, general sample). Participants viewed a fruit drink that differed in the presence of a "100% Vitamin C" nutrition claim, a fruit image, or a health warning. On average across the three studies, consumers who saw a claim on a fruit drink believed that the drink was more healthful than those who did not see the claim (mean average differential effect (ADE) = 0.66, p < .001); they were also more interested in consuming the drink (mean ADE = 0.38, p = .001). The health warning decreased perceived product healthfulness (mean ADE = -0.65, p < .001) and consumption interest (mean ADE = -0.49, p < .001). The fruit image had no effect on perceived product healthfulness (mean ADE = 0.03, p = .81) or purchase intentions (mean ADE = -0.04, p = .77). In Study 1 and Study 2, there were no interactions between claims, images, or warnings (all p > .05). In Study 3, the "100% Vitamin C" nutrition claim only increased perceived product healthfulness when the drink did not also have a health warning (interaction p < .05). These findings suggest that 100% Vitamin C claims increase the appeal of fruit drinks, whereas health warnings decrease the appeal. Together, these studies support policies to restrict marketing and require health warnings on sugar-sweetened beverage packaging.
... Communication about a VLNC standard could include a disclaimer that "The new cigarettes will not be safer to smoke than current cigarettes." However, disclaimers are often ineffective, [41][42][43][44][45] and additionally, the disclaimers would not necessarily be repeated in media coverage, social media discussions, or interpersonal communications. Another possible solution could be explaining a VLNC standard not by the nicotine content but by saying that cigarettes would be "changed so that they no longer relieved your cravings." ...
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Significance: The public incorrectly believes very low nicotine content (VLNC) cigarettes are less carcinogenic than current cigarettes, a belief associated with lower motivation to quit under a VLNC standard. We examined how different descriptions of the nicotine level in VLNC cigarettes affect the accuracy of the public's perceptions about nicotine content, addictiveness, and cancer risk. Methods: Participants were a national convenience sample of 1353 US adults (22% smokers). In an online experiment, we randomized participants to a VLNC description using (1) concise language; (2) a percentage; (3) an interpretation; (4) a percentage and interpretation; (5) a percentage and a pictograph; or (6) a percentage, interpretation, and pictograph; or to a control description using (7) FDA's "minimally or nonaddictive" phrasing. We assessed accuracy of perceived nicotine content, addictiveness, and cancer risk compared to current cigarettes. Results: Compared to control, the percentage description resulted in more accurate perceptions about nicotine content (76% vs. 49% accuracy) and addictiveness (44% vs. 34%), but less accurate perceptions about cancer risk (56% vs. 68%; all ps < .05). Adding interpretation or pictographs to the percentage description did not increase accuracy. The concise language description reduced accuracy of perceived nicotine content and addictiveness but increased accuracy of cancer risk (all ps < .05). Conclusions: Stating that 95% of nicotine would be removed more accurately conveyed the nicotine content and addictiveness of VLNC cigarettes. However, descriptions that better conveyed nicotine content and addictiveness misled people about cancer risk. Implications: Implementation of a VLNC standard should include plans for a communication campaign that conveys that VLNC cigarettes will be less addictive but equally toxic to smoke. Stating the percent reduction in nicotine is likely to more clearly communicate reduced addictiveness but may also exacerbate risk misperceptions. VLNC communication requires further study to ensure the public accurately understands a VLNC standard.
... 11 Psychology research and survey-design literature indicate that people often skim over such disclaimers, so they do not perform their intended purpose. 10 In concurrence with such theories, the results here suggest that written advisements accompanying algorithmic outputs may not affect the accuracy of decisions in a significant way. ...
Collaboration between humans and machines does not necessarily lead to better outcomes.
... There is a rich bulk of research, however, showing that such an assumption is actually wrong, and that deceitful practices are usually disadvantageous or even disastrous for dishonest and fraudulent entrepreneurs. These issues are discussed at length in Green and Armstrong (2012), who present them in the context of the effects of mandatory disclaimers in advertising. The authors convincingly argue that being honest and fair with the customers is in the advertisers' best interest, and that there is no need to impose the placement of any obligatory disclosures in commercials. ...
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The law is not effective in forcing the advertisers to communicate complete and reliable information about advertised products: the mere inclusion of written disclosures does not guarantee their successful perception, let alone comprehension. TV commercials are especially troublesome in this respect, because not only are the disclaimers presented in microscopic font size, but their display time challenges the perceptive abilities of even the most effi cient readers, not to mention the distracting effect of the simultaneously presented visual images and voice-overs. Yet, their effective comprehension could very often signifi cantly modify the overall message and in this way lead to altered (often in a way unfavourable for the advertiser) persuasive effect. The study presents the ways in which the small print components interact with the information presented by means of the more conspicuous linguistic and pictorial items in a collection of 20 Polish TV commercials for erection stimulants. In particular, attention is given to the potential changes in the communicated message in the conditions of full comprehension and intake of the small print items.
... 12 13 16 Disclaimers are unlikely to remedy these misperceptions as evidenced by industry-sponsored studies 26 and by external scientists. 40 Exposure and risk beliefs mediated all pathways to susceptibility to use MRTPs in both experiments and age groups, which is broadly consistent with our hypotheses. However, only risk claims changed use susceptibility and only among adults. ...
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Objective Under US law, tobacco product marketing may claim lower exposure to chemicals, or lower risk of health harms, only if these claims do not mislead the public. We sought to examine the impact of such marketing claims about potential modified risk tobacco products (MRTPs). Methods Participants were national samples of 4797 adults and 969 adolescent US smokers and non-smokers. We provided information about a potential MRTP (heated tobacco product, electronic cigarette or snus). Experiment 1 stated that the MRTP was as harmful as cigarettes or less harmful (lower risk claim). Experiment 2 stated that the MRTP exposed users to a similar quantity of harmful chemicals as cigarettes or to fewer chemicals (lower exposure claim). Results Claiming lower risk led to lower perceived quantity of chemicals and lower perceived risk among adults and adolescents (all p<0.05, Experiment 1). Among adults, this claim led to higher susceptibility to using the MRTP (p<0.05). Claiming lower exposure led to lower perceived chemical quantity and lower perceived risk (all p<0.05), but had no effect on use susceptibility (Experiment 2). Participants thought that snus exposed users to more chemicals and was less safe to use than heated tobacco products or electronic cigarette MRTPs (Experiments 1 and 2). Discussion Risk and exposure claims acted similarly on MRTP beliefs. Lower exposure claims misled the public to perceive lower perceived risk even though no lower risk claim was explicitly made, which is impermissible under US law.
... In light of these commonsense beliefs, it is remarkable that all experimental evidence has shown that buyers and sellers have been harmed by mandated disclosures (Ben-Shahar and Schneider, 2011;Winston, 2008). The same applies to mandated disclaimers (Green and Armstrong, 2012). ...
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This article reviews experimental evidence on the effects of policies intended to promote behavior by firms that is more socially responsible and less socially irresponsible. Corporate social responsibility (CSR) can provide firms with opportunities for profit, but changes are likely to increase total welfare only if firms adopt them freely and without taxpayer subsidies. Mandated CSR circumvents people's own plans and preferences, distorts the allocation of resources, and increases the likelihood of irresponsible decisions. Evidence that government policies will increase welfare and a compelling argument that proven benefits outweigh reductions in freedom are necessary in order to justify CSR mandates. To date, this has apparently not been achieved. Corporate social irresponsibility (CSI) is concerned with whether firms undertake harmful actions that managers would be unwilling to undertake acting for themselves, or that a reasonable person would expect to cause substantive net harm when all parties are considered. Markets in which stakeholders are free to make decisions in their own interests provide some protection against CSI. Tort and contract law provide additional protection. Nevertheless, managers sometimes act irresponsibly. Codes of ethics that require fair treatment of stakeholders while pursuing long-term profit can reduce the risk of irresponsible decisions. Management support and stakeholder accounting are important for successful implementation. Firms may wish to consider these measures; many already have.
Based on the theoretical findings from the existing literature, some policymakers and software engineers contend that algorithmic risk assessments such as the COMPAS software can alleviate the incarceration epidemic and the occurrence of violent crimes by informing and improving decisions about policing, treatment, and sentencing. Considered in tandem, these findings indicate that collaboration between humans and machines does not necessarily lead to better outcomes, and human supervision does not sufficiently address problems when algorithms err or demonstrate concerning biases. If machines are to improve outcomes in the criminal justice system and beyond, future research must further investigate their practical role: an input to human decision makers.
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Prior research has demonstrated various effects of exposure to thin‐idealized models in advertisements on consumers’ product evaluations. Although this past research provides important insights, it does not take into account that many of these thin‐idealized images have been digitally manipulated. The present work studies the consequences of disclosure of this digital manipulation and the process consumers engage in when evaluating the brands responsible for these advertisements. We demonstrate that retouched advertisements may, contrary to conventional wisdom, have favorable consequences. Indeed, we show that individuals have more favorable brand attitudes for retouched (vs. unretouched) ads when retouching is disclosed (vs. undisclosed). We show that disclosed retouched ads utilize a two‐sided persuasive appeal, therefore leading consumers to evaluate the brand more favorably. We replicate this effect and explore attractiveness‐relevant products and type of disclosure as boundary conditions.
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After discussing the value of trademarks to consumers and businesses, the authors outline the major objectives of trademark law. The authors review recent federal trademark infringement cases that involve the use of disclaimers, in terms of the extent to which disclaimers reduce the likelihood of consumer confusion. The authors then note recent trends and provide suggestions for further research.
During the past 15 years, the U.S. Supreme Court has used Central Hudson Gas v. Public Service Commission (1980) to expand significantly the power of the government at all levels to regulate advertising and other promotional activities. As a result, first amendment protection for commercial speech has steadily diminished. In this article, Supreme Court decisions subsequent to Central Hudson are reviewed to provide an update of Cohen's (1978) work. In addition, the current standard for identifying commercial speech is analyzed, and managerial recommendations are made to guide managers who are responsible for making promotional decisions in this increasingly restricted area.
If the meaning contained in a remedial message has not been satisfactorily comprehended, then its intended impact upon consumer beliefs cannot logically be achieved. The present investigation, employing three heterogeneous samples, found that remedial messages using “plain English” developed and proposed by the FTC may be widely misunderstood by large segments of the population.
Corrective advertising is one of the most controversial regulatory proposals made in recent years. This article provides an in-depth look at this FTC program, analyzes the theory behind FTC's management of this power, and reviews research findings. It then proposes a significant change in the program to make it more equitable and efficient than in the past.
The major findings of a large scale AAAA study into the miscomprehension of televised communication are summarized. Implications for advertising research and public policy are discussed.
When deciding for whom to vote, voters should select the candidate they expect to best handle issues, all other things equal. A simple heuristic predicted that the candidate who is rated more favorably on a larger number of issues would win the popular vote. This was correct for nine out of ten U.S. presidential elections from 1972 to 2008. We then used simple linear regression to relate the incumbent’s relative issue ratings to the actual two-party popular vote shares. The resulting model yielded out-of-sample forecasts that were competitive with those from the Iowa Electronic Markets and other established quantitative models. This model has implications for political decision-makers, as it can help to track campaigns and to decide which issues to focus on.
Advertising prescription drugs directly to the public is a marketing strategy currently being considered by several manufacturers. However, direct-to-consumer advertising is discouraged because federal regulations mandate extensive disclosure of product risks within television commercials. An experimental study of 676 subjects was performed to examine the impact of risk disclosure variations in television commercials on awareness and knowledge of both the warnings and the promotional messages. The amount, specificity, and format of risk information contained in the ads was varied while the promotional message remained constant. Results indicated a “trade-off” in risk/benefit communications. Risk disclosures that produced greater risk awareness and knowledge also reduced promotional message awareness and knowledge.