Controls on Advertising: an Examination of Some Economic Arguments

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Abstract
There is increasing pressure to regulate advertising in Britain, and economic concepts are often advanced to support such a policy. One argument is that advertising is wasteful, but this depends upon a quite arbitrary view of what kinds of product differences are considered important. A second argument is that advertising distorts consumer tastes. This claim reflects a particular psychological view (behaviourism) which is not widely accepted nowadays. Other psychological theories, reflected in the writings of modern economists, see advertising as playing a constructive role in helping to reveal tastes, with consumers playing an active rather than passive role in choice. The proposals to limit advertising thus depend upon particular value judgements or psychological theories for which economics provides no justification.

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