Abstract

Previous research has examined advertising’s effect on consumer attitudes, brand preferences, and firm value—just to name a few. Yet, research on the broader implications of advertising such as how advertising impacts societal well-being has been limited. We compile a dataset of per capita advertising spending (what we call advertising environment) to investigate how a country’s advertising environment affects life satisfaction within that country. We deal with several sources of endogeneity and account for other determinants of life satisfaction (e.g., GDP, social support) in our analysis. Results from a fixed-effect model for 80 countries from 2006-2017 indicate that advertising environment positively impacts life satisfaction in a country. We suggest this occurs because of advertising’s ability to reduce marketplace uncertainty. Consistent with this, we find that this effect is moderated by other factors that affect uncertainty in the marketplace—perceived corruption and competition. An experiment provides additional support for our explanation. Our findings thus offer several implications for scholars, practitioners, policy makers, and consumers about the unappreciated societal benefits of advertising.