Is advertising evil?

Vox says the data supports Matt’s priors:

There is an old debate in economic theory… about whether advertising increases or decreases the prices of consumer goods. Some have argued that advertising provides information to consumers, such as information on prices or the existence of products. This information increases the degree of competition in a market, and thereby lowers consumer prices. On the other hand, there is the view that advertising changes the preferences of consumers, for example by shifting demand curves outwards, increasing the monopoly power of brands or decreasing elasticities of substitution. All these effects should lead to an increase of market prices.

…advertising increased consumer prices in some industries such as alcohol, tobacco and transportation, in which the persuasive effect dominates. But it also decreased consumer prices in other industries such as food. …those industries which exhibit the informative price include more information in their advertisements, consistent with the interpretation of informational and persuasive forces of advertising.

The aggregate effect is informative, which means that, on average, advertising decreases consumer prices.

Also, a perspective from inside advertising.

  • http://tvhe.co.nz/ Matt Nolan

    I like this as it supports my priors about believing my priors