John Kenneth Galbraith
Impeach George W. Bush. Impeach Him Now

The Mind Is Its Own Place...

The mind is its own place, and can make a heaven of hell, a hell of heaven. Or so John Milton's Satan argued to himself, after his failed attempt at regime change.

Marginal Revolution: Did Gary Becker prove that advertising is informative?: Did Gary Becker prove that advertising is informative? So claims a NYT obituary for John Kenneth Galbraith. CrookedTimber and Brad DeLong question whether such models should be called "proofs." Fair enough, but neither does the obituary correctly represent Becker's theory of advertising. As I understand Becker's work (with Kevin Murphy) on the topic, individuals consume "social images" or "self-images." Having Nike shoes gives you the "benefits of being cool" if a) you actually have Nikes, and b) the ad links Nikes to a cool image for your relevant peer group. The standard economic theory of complements then applies for analyzing ads.

Under some conditions, advertising can be a "bad" for consumers, not a "good," and advertisers will pay consumers to watch ads. Furthermore ads will present images and cultural linkages, rather than substantive information in the traditional sense. This generates some Galbraithian results, but without requiring that consumers are "tricked" or even "persuaded" into a particular point of view. This is not a proof; I think of it as an existence theorem that advertising can make corporate sense, and sometimes be socially welfare-improving, yet without being very informative...

It is, of course, true that in the Becker-Murphy "social images" model commercial advertising cannot get you to the first-best. A world in which you have to wear Nike shoes in order to obtain a symbolic link to the successful athletic career of Michael Jordan is worse than one in which wearing any shoes at all gives you a symbolic link to the successful athletic career of Michael Jordan. The government should take Nike's TV advertising slots by eminent domain, and play commercials that link all shoes--not just Nikes--to the "cool image" of Michael Jordan.