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This proves that ads can make us pay a lot of money, willingly, for something vital when a cheaper alternative exists ...

How do we do the same with gasoline? ie how to we increase taxes on fuel and make it a lifestyle choice rather than evil socialist interventionism?

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Wed Aug 5th, 2009 at 04:34:49 PM EST
It's the same thing as branded clothes. Sure, if the brands were the guarantee of some incredibly superior quality (I don't know, maybe Savile Row suits?) then the brand is a guarantee that you're actually getting what you pay for. These very brandings will then be small and discrete I'd guess, no reason to flaunt them as the only person who needs to know that the thing is of superior quality is the buyer himself.

But when the quality is the same or even inferior, why do people pay so bloody much for brands? Shouldn't the companies pay us for wearing their logos, just like they pay to have them shown on TV or billboards? I can't understand it for the life of me! J and Migeru, o oracles of economics, have you got any ideas?

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Wed Aug 5th, 2009 at 04:40:58 PM EST
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Perhaps you missed this.

Although personally I also like the Pavlovian rats and levers analogy - not that it's necessarily incompatible.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Wed Aug 5th, 2009 at 05:06:14 PM EST
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Starvid:
oracles of economics, have you got any ideas?
Standard economics states that advertising plays an informative role in the market and otherwise completely ignores the uncomfortable questions of why firms invest so much in advertising or how much return they get from their advertisement investment.

This view of advertising is demolished by JK Galbraith in The New Industrial State, which I thought you were reading?

Basically Galbraith claims (if I am not mistaken this is a key part of what he calls the "revised sequence") that firms manage consumer demand through a variety of means and that advertising is a key way to both create needs and maintain a level of demand for them.

Obviousle since standard microeconomics takes consumer sovereignty as axiomatic, an analysis of how firms control consumer demand is anywhere between nonsense or anathema, depending on how well a neoclassical economist understands the extent to which Galbraith's view of advertising threatens the foundations of standard microeconomics.

The peak-to-trough part of the business cycle is an outlier. Carnot would have died laughing.

by Migeru (migeru at eurotrib dot com) on Thu Aug 6th, 2009 at 04:16:15 AM EST
[ Parent ]
This view of advertising is demolished by JK Galbraith in The New Industrial State, which I thought you were reading?

Haven't gotten to that part yet, the book is pretty dense. Not really the kind where you read each page in 30 seconds.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Thu Aug 6th, 2009 at 09:57:12 AM EST
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But it is the kind of book that you don't really have to read linearly. You could skip to the chapter on advertising today, since the subject came up.

The peak-to-trough part of the business cycle is an outlier. Carnot would have died laughing.
by Migeru (migeru at eurotrib dot com) on Thu Aug 6th, 2009 at 09:59:04 AM EST
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One of the advantages of using an exclusive water closet is the little library of non-linear books in there that can be perused at leisure.

Oliver Stutchbury, who built Save & Prosper in the Sixties and Seventies (and also wrote tomes on the use of principle, unit trust management and capital taxes) kept the entire UK Tax code in his little room. He told me it was quite a strain to read them.

You can't be me, I'm taken

by Sven Triloqvist on Thu Aug 6th, 2009 at 10:12:52 AM EST
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Economists tend to focus on the elasticity of advertising in getting a customer to purchase a given item rather than a competing item, to downplay demand creation, and to completely ignore the meta level (the 24/7 propaganda machine to go out and buy stuff that is the advertising industry).
by nanne (zwaerdenmaecker@gmail.com) on Thu Aug 6th, 2009 at 10:50:06 AM EST
[ Parent ]
nanne:
the 24/7 propaganda machine to go out and buy stuff and feel happy, strong, sexy and free that is the advertising industry

Important addendum.

by afew (afew(a in a circle)eurotrib_dot_com) on Thu Aug 6th, 2009 at 03:45:45 PM EST
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Back in the long long ago, there used to be gasoline brands, and gasoline commercials ("Exxon puts a tiger in your tank!"). For some reason that fell out of favor. Might it be because gasoline is commoditized and comes just from a single source? I mean, they've managed to take premium prices for so called "green electricity".

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Wed Aug 5th, 2009 at 04:43:14 PM EST
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I suspect the generalisation of the motor vehicle culture along with a prolonged period of cheap oil changed the nature of the marketing (as profit margins fell).
by afew (afew(a in a circle)eurotrib_dot_com) on Thu Aug 6th, 2009 at 01:52:17 AM EST
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Put the question to the marketing and ad people, and they'll come up with a response. But who will pay for this? Arguably it should be the taxing authority which takes a much bigger slice of the cake than the oil companies themselves.

So by all means let's argue for higher petrol taxes. But also that a percentage of the tax be ring-fenced for communications purposes.

by afew (afew(a in a circle)eurotrib_dot_com) on Thu Aug 6th, 2009 at 01:57:33 AM EST
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