In some earlier posts I talked about the idea that advertisements can be privately profitable for firms but still be socially harmful due to uninternalized negative effects on their targets. In the comments, Glen Raphael asked me for an example. Here are a few of my favorites.
One of the ads I saw before watching 2 movies last month was one about "Little Deviants". It tries to sell a very boring-looking car (the Scion) by showing society as divided into 2 classes: the Sheeple, who look like sheep; and the Little Deviants, who gleefully kill and eat the Sheeples. The end of the commercial shows a Sheeple desperately running away from one of the Little Deviants, who has just killed all his companions, and looks to rescue to a Scion that just pulled up at the curb. The window opens, and another Little Deviant leans out the window, and eats most of the Sheeple, flinging his dismembered head out onto the front of the car to become a hood ornament.
Toyota also has a video game to go along with the commercial, which explains further that the "Sheeple" have "spread their gray disease" throughout the world, and that your task is to kill as many of them as possible (although they don't seem to be doing anybody any harm). Then you use their body parts as equipment. Eventually, you use their blood to produce new Scions.
I know that comparing somebody to Hitler is considered bad form, but really - they're begging for it.
Toyota says, in response to questions, that "People that find it offensive are not our target."
I googled for comments on this ad just now, and the only people I found who were upset about it were, sadly, right-wing conservatives:http://www.rightwingnews.co...
"it takes almost a wilful refusal to acknowledge reality to deny ... that someone, somewhere, is making a rational decision to ... become an alcoholic, or to become addicted to cigarettes"
Inconsistent time preferences are arguably not irrational. Is there any evidence that this effect also happens with probability judgments, as opposed to simple preferences?
Re: someone who's written a book about the dangers of Disney
Most notably, this would be Ariel Dorfman; chilean exile (Pinochet tried to have him killed, thought he had and gleefully announced his "death" prematurely). Dorfman wrote How to Read Donald Duck: Imperialist Ideology in the Disney Comic (1984) ISBN 0-88477-023-0. The subject of your post is ironic considering Dorfman's essay. Also strongly recommended is The Empire's Old Clothes: What the Lone Ranger, Babar, and Other Innocent Heroes Do to Our Minds (1983, 1996) ISBN: 978-0140256376, which further discourses on the effect of US imported media functioning as an agent of imperialism. Quite an eye opener.
Glen, "If I start buying them I presumably enjoy the taste of Crunch bars more than they cost (including health costs as well as monetary costs)" is exactly what I'm trying to deny here. There's simply no good reason to believe that consumer choices work that way, not with the host of well-documented psychological glitches and departures from rationality. In fact, given the role of information costs in things like health effects, even a perfectly rational consumer might lose welfare from advertising. (Consumer's latent preference for candy bars is activated, consumer has insufficient information about the health costs of the candy bars [perhaps because consumer is a child], that information is very costly [ditto, child], and so consumer over-spends on candy.)
It's so obvious that these effects are real that it takes almost a wilful refusal to acknowledge reality to deny it -- to suggest that someone, somewhere, is making a rational decision to purchase candy bars at age 7 (or allow their child to do the same), or to purchase lottery tickets as an adult, or to become an alcoholic, or to become addicted to cigarettes. A lot of people purchase products, every single day, that predictably make their lives a misery, that cause a loss of welfare under any set of preference orderings that any sane person can be expected to endorse. And appealing to some kind of intuition about people's utility functions being readable off their behavior to state the opposite is nothing more than a reductio of that intuition.
Companies like Goodyear often pay for the construction and operation of a racing car which costs more than its weight in gold. So sure, why not a giant gold locust statue? The trick would be making sure sure people know about it and connect it to your product in a positive way. Which is easier with some symbols than others and would in any case require lots of advertisement. (Is there a logical connection between insurance and the TransAmerica building? Between a television display and ten thousand superballs?)
Regarding the Nestle Crunch example, quite a lot of advertising is essentially a zero-sum game for the advertisers. Consider the Burger Wars or the Soda Wars: when Pepsi gains me as a customer, Coke loses me as a customer. When Nestle gains, Hershey loses and vice-versa. I might get tired of one product and switch to another for a while, then switch back. Most of the time when ads remind me of a latent preference and cause a change it's at the expense of a different consumer product.
But if an ad grows the relevant market and convinces me to buy more Crunch bars at the expense of healthier foods or less food, there are both negative and positive externalities associated with that. If I start buying them I presumably enjoy the taste of Crunch bars more than they cost (including health costs as well as monetary costs) so my purchase should produce a net consumer surplus for me.
"If the positive association doesn't linger very long, what this amounts to is inducing people to buy a product for a benefit that goes away."That seems like an argument that advertisers should continue to advertise to you even after you've bought the product, in order to strengthen and extend the positive association. And, in fact, they do that. Is that what you meant to imply?
There are other theories besides performance bonds. Marketing folks talk in terms of people buying an image; they want other people to see them a certain way because of the products they use. The ads serve to make clear the image that is supposed to be associated with a product, and to make clear that people continue to use this association.
I don't buy it either. Never mind Occam's Razor; what happened to common sense? Pepsi advertisements are performance bonds? Leaving aside the problems in the supposed reasoning - the notion of a costly signal of confidence in ability to sell products could be applied to *any* expense no matter how absurd, like a giant gold statue of a fourteen-legged locust - such deliberate and counterintuitive reasoning would have to take place explicitly in the mind of the consumer and of advertisers; it would be openly acknowledged and broadcast.
I don't buy it. At a certain point, one has to apply occam's razor. We can imagine all sorts of fantastical functions for anything -- perhaps coke's polar bear ads remind consumers of their committment to stop global warming, and consumers want to give their money to coke in gratitude for that reminder. But we already know of a psychological mechanism (salience) that seems almost tailored to respond to this sort of behavior -- surely the better hypothesis is that said mechanism is doing the work rather than all these just so stories. (This is really the sort of thing that qualitative research would be great at revealing, I think. If pepsi's advertisers don't even mention those stories as a reason for their advertising choices, I'm not sure what a large-n consumer survey or a lab experiment could say to the contrary.)
Also, Glen, why are the last two of those things ok? The Nestle Crunch bar reminder strikes me as potentially harmful in the sense that by activating (alleged) latent past preferences for a single product, it might bump aside other preferences. For example, if a consumer is reminded that they like Nestle Crunch, it may lead them to forget that they also like weight loss, and that they actually prefer weight loss to Nestle Crunch. In other words, it directly taps into the salience problem I've been repeating.
The positive mental association thing is definitely a problem. Here's an easy example: for most products, the purchase period is much, much shorter than the use period. (When you buy a car, it takes a few hours. You use it for years.) If the positive association doesn't linger very long, what this amounts to is inducing people to buy a product for a benefit that goes away. You buy the Hummer because it makes you feel manly, but then that feeling wears off and you're stuck with a car whose fuel efficiency ought to be measured in gallons per mile rather than miles per gallon. Also, it's not clear that it's welfare-enhancing to modify preferences -- I think there's arguments to be made on both sides, but it's far from obvious either way.
Glen is right, there are lots of plausible reasons why Pepsi would have ads that do not appear to give much info about Pepsi, and yet do not require irrational consumers. Of course this does not mean that Pepsi consumers are rational.
Pepsi wouldn't deliberately poison the customers, but they might choose to scrimp on any number of ingredients or processes such that the end result - even by accident - had a chance of being less healthy /or/ less tasty than the consumer expects. We need assurances that they haven't done that and don't /plan/ to do so; performance bonds help provide that assurance.
Another role of ads is informational. Even if I've tried a product in the past and liked it, I might forget about it. An occasional reminder that I used to really like, say, Nestle Crunch bars makes me more likely to try them again and see if I /still/ like them. This is especially useful in the case of new product introductions, but old brands need "we're still around" ads too.
Lastly, a good ad can create positive mental associations such that having seen the ad makes me enjoy the product more than I otherwise would, because there are positive feelings associated with it. Like music videos help sell albums, commercials can associate a story, an idea, or a feeling with the experience of using a product.
In all these cases, advertising makes consumers better off.
Glen: that's a plausible story for mid-level advertisers, but is there really any imaginable (even unconscious) consumer perception that a company the size of Pepsi is going to suddenly put turpentine in the soda?
(And then how do you explain product placements, e.g., in movies and TV shows, which are designed to be unobtrusive?)
Paul: one way to think of an expensive Pepsi ad is as a performance bond. When Pepsi spends a million dollars on an ad, they are expressing confidence in the quality and safety of their product in a highly visible way. Pepsi can only make back the money they've spent on the ad if those who buy Pepsi continue to feel they've gotten their money's worth. If the product were bad, they'd go out of business. Thus, it's perfectly rational for a consumer to feel safer and more secure buying a heavily-advertised product than a no-name brand.
Pepsi pays for Superbowl ads for much the same reason that banks pay for marble floors. The subtext in both cases is the message "we expect to stay in business a long time." In which case it doesn't matter what explicit info the ad provides; the cost of the medium is the message.
Isn't the simple fact that ads increase sales, while providing no information that a sane individual would use to make their decisions, enough to indicate that ads are harmful? Surely inducing people to act based on nonsensical motivations is an injury to the people who incur the costs of so acting?
(And it's obvious that many ads are designed only to induce people to act based on nonsensical motivations -- consider ads for major soft drinks. Everyone knows coke and pepsi exist, and the advertisements provide no actual information -- their only concievable purpose is to exploit salience biases.)
I hate summer school. it sucks beyond all reason. Thank you for understanding me.
Ooh - I have one!
One of the ads I saw before watching 2 movies last month was one about "Little Deviants". It tries to sell a very boring-looking car (the Scion) by showing society as divided into 2 classes: the Sheeple, who look like sheep; and the Little Deviants, who gleefully kill and eat the Sheeples. The end of the commercial shows a Sheeple desperately running away from one of the Little Deviants, who has just killed all his companions, and looks to rescue to a Scion that just pulled up at the curb. The window opens, and another Little Deviant leans out the window, and eats most of the Sheeple, flinging his dismembered head out onto the front of the car to become a hood ornament.
Toyota also has a video game to go along with the commercial, which explains further that the "Sheeple" have "spread their gray disease" throughout the world, and that your task is to kill as many of them as possible (although they don't seem to be doing anybody any harm). Then you use their body parts as equipment. Eventually, you use their blood to produce new Scions.
I know that comparing somebody to Hitler is considered bad form, but really - they're begging for it.
Toyota says, in response to questions, that "People that find it offensive are not our target."
I googled for comments on this ad just now, and the only people I found who were upset about it were, sadly, right-wing conservatives:http://www.rightwingnews.co...
"to suggest that someone, somewhere, is making a rational decision to purchase candy bars at age 7 (or allow their child to do the same)..."
I remember purchasing candy numerous times when I was 7, and I still consider those decisions to be no less rational than any others I have made.
"it takes almost a wilful refusal to acknowledge reality to deny ... that someone, somewhere, is making a rational decision to ... become an alcoholic, or to become addicted to cigarettes"
Inconsistent time preferences are arguably not irrational. Is there any evidence that this effect also happens with probability judgments, as opposed to simple preferences?
Paul has essentially summarized my viewpoint.
Re: someone who's written a book about the dangers of Disney
Most notably, this would be Ariel Dorfman; chilean exile (Pinochet tried to have him killed, thought he had and gleefully announced his "death" prematurely). Dorfman wrote How to Read Donald Duck: Imperialist Ideology in the Disney Comic (1984) ISBN 0-88477-023-0. The subject of your post is ironic considering Dorfman's essay. Also strongly recommended is The Empire's Old Clothes: What the Lone Ranger, Babar, and Other Innocent Heroes Do to Our Minds (1983, 1996) ISBN: 978-0140256376, which further discourses on the effect of US imported media functioning as an agent of imperialism. Quite an eye opener.
Glen, "If I start buying them I presumably enjoy the taste of Crunch bars more than they cost (including health costs as well as monetary costs)" is exactly what I'm trying to deny here. There's simply no good reason to believe that consumer choices work that way, not with the host of well-documented psychological glitches and departures from rationality. In fact, given the role of information costs in things like health effects, even a perfectly rational consumer might lose welfare from advertising. (Consumer's latent preference for candy bars is activated, consumer has insufficient information about the health costs of the candy bars [perhaps because consumer is a child], that information is very costly [ditto, child], and so consumer over-spends on candy.)
It's so obvious that these effects are real that it takes almost a wilful refusal to acknowledge reality to deny it -- to suggest that someone, somewhere, is making a rational decision to purchase candy bars at age 7 (or allow their child to do the same), or to purchase lottery tickets as an adult, or to become an alcoholic, or to become addicted to cigarettes. A lot of people purchase products, every single day, that predictably make their lives a misery, that cause a loss of welfare under any set of preference orderings that any sane person can be expected to endorse. And appealing to some kind of intuition about people's utility functions being readable off their behavior to state the opposite is nothing more than a reductio of that intuition.
Companies like Goodyear often pay for the construction and operation of a racing car which costs more than its weight in gold. So sure, why not a giant gold locust statue? The trick would be making sure sure people know about it and connect it to your product in a positive way. Which is easier with some symbols than others and would in any case require lots of advertisement. (Is there a logical connection between insurance and the TransAmerica building? Between a television display and ten thousand superballs?)
Regarding the Nestle Crunch example, quite a lot of advertising is essentially a zero-sum game for the advertisers. Consider the Burger Wars or the Soda Wars: when Pepsi gains me as a customer, Coke loses me as a customer. When Nestle gains, Hershey loses and vice-versa. I might get tired of one product and switch to another for a while, then switch back. Most of the time when ads remind me of a latent preference and cause a change it's at the expense of a different consumer product.
But if an ad grows the relevant market and convinces me to buy more Crunch bars at the expense of healthier foods or less food, there are both negative and positive externalities associated with that. If I start buying them I presumably enjoy the taste of Crunch bars more than they cost (including health costs as well as monetary costs) so my purchase should produce a net consumer surplus for me.
"If the positive association doesn't linger very long, what this amounts to is inducing people to buy a product for a benefit that goes away."That seems like an argument that advertisers should continue to advertise to you even after you've bought the product, in order to strengthen and extend the positive association. And, in fact, they do that. Is that what you meant to imply?
(Incidentally, Hummers get 17 mpg.)
There are other theories besides performance bonds. Marketing folks talk in terms of people buying an image; they want other people to see them a certain way because of the products they use. The ads serve to make clear the image that is supposed to be associated with a product, and to make clear that people continue to use this association.
I don't buy it either. Never mind Occam's Razor; what happened to common sense? Pepsi advertisements are performance bonds? Leaving aside the problems in the supposed reasoning - the notion of a costly signal of confidence in ability to sell products could be applied to *any* expense no matter how absurd, like a giant gold statue of a fourteen-legged locust - such deliberate and counterintuitive reasoning would have to take place explicitly in the mind of the consumer and of advertisers; it would be openly acknowledged and broadcast.
I don't buy it. At a certain point, one has to apply occam's razor. We can imagine all sorts of fantastical functions for anything -- perhaps coke's polar bear ads remind consumers of their committment to stop global warming, and consumers want to give their money to coke in gratitude for that reminder. But we already know of a psychological mechanism (salience) that seems almost tailored to respond to this sort of behavior -- surely the better hypothesis is that said mechanism is doing the work rather than all these just so stories. (This is really the sort of thing that qualitative research would be great at revealing, I think. If pepsi's advertisers don't even mention those stories as a reason for their advertising choices, I'm not sure what a large-n consumer survey or a lab experiment could say to the contrary.)
Also, Glen, why are the last two of those things ok? The Nestle Crunch bar reminder strikes me as potentially harmful in the sense that by activating (alleged) latent past preferences for a single product, it might bump aside other preferences. For example, if a consumer is reminded that they like Nestle Crunch, it may lead them to forget that they also like weight loss, and that they actually prefer weight loss to Nestle Crunch. In other words, it directly taps into the salience problem I've been repeating.
The positive mental association thing is definitely a problem. Here's an easy example: for most products, the purchase period is much, much shorter than the use period. (When you buy a car, it takes a few hours. You use it for years.) If the positive association doesn't linger very long, what this amounts to is inducing people to buy a product for a benefit that goes away. You buy the Hummer because it makes you feel manly, but then that feeling wears off and you're stuck with a car whose fuel efficiency ought to be measured in gallons per mile rather than miles per gallon. Also, it's not clear that it's welfare-enhancing to modify preferences -- I think there's arguments to be made on both sides, but it's far from obvious either way.
Glen is right, there are lots of plausible reasons why Pepsi would have ads that do not appear to give much info about Pepsi, and yet do not require irrational consumers. Of course this does not mean that Pepsi consumers are rational.
Pepsi wouldn't deliberately poison the customers, but they might choose to scrimp on any number of ingredients or processes such that the end result - even by accident - had a chance of being less healthy /or/ less tasty than the consumer expects. We need assurances that they haven't done that and don't /plan/ to do so; performance bonds help provide that assurance.
Another role of ads is informational. Even if I've tried a product in the past and liked it, I might forget about it. An occasional reminder that I used to really like, say, Nestle Crunch bars makes me more likely to try them again and see if I /still/ like them. This is especially useful in the case of new product introductions, but old brands need "we're still around" ads too.
Lastly, a good ad can create positive mental associations such that having seen the ad makes me enjoy the product more than I otherwise would, because there are positive feelings associated with it. Like music videos help sell albums, commercials can associate a story, an idea, or a feeling with the experience of using a product.
In all these cases, advertising makes consumers better off.
Glen: that's a plausible story for mid-level advertisers, but is there really any imaginable (even unconscious) consumer perception that a company the size of Pepsi is going to suddenly put turpentine in the soda?
(And then how do you explain product placements, e.g., in movies and TV shows, which are designed to be unobtrusive?)
Paul: one way to think of an expensive Pepsi ad is as a performance bond. When Pepsi spends a million dollars on an ad, they are expressing confidence in the quality and safety of their product in a highly visible way. Pepsi can only make back the money they've spent on the ad if those who buy Pepsi continue to feel they've gotten their money's worth. If the product were bad, they'd go out of business. Thus, it's perfectly rational for a consumer to feel safer and more secure buying a heavily-advertised product than a no-name brand.
Pepsi pays for Superbowl ads for much the same reason that banks pay for marble floors. The subtext in both cases is the message "we expect to stay in business a long time." In which case it doesn't matter what explicit info the ad provides; the cost of the medium is the message.
Isn't the simple fact that ads increase sales, while providing no information that a sane individual would use to make their decisions, enough to indicate that ads are harmful? Surely inducing people to act based on nonsensical motivations is an injury to the people who incur the costs of so acting?
(And it's obvious that many ads are designed only to induce people to act based on nonsensical motivations -- consider ads for major soft drinks. Everyone knows coke and pepsi exist, and the advertisements provide no actual information -- their only concievable purpose is to exploit salience biases.)