Tuesday, May 09, 2006


Advertising and Public Education

Should advertising of potentially dangerous or risk-associated goods and services be regulated by the public health czars? Examples often cited include the fast food moguls, evil tobacco, and alcohol. Should they be charged with corrupting our youth?

Although there is certainly evidence to suggest the advertising is an effective use of company resources (individuals purchase goods and services), does that imply that an appropriate policy is to limit advertisizing mediums to "dangerous" products?

In the 1970's and 1980's the federal government and the other groups effectively limited cigarette and alcohol advertising to minors. In more recent times, there have been called for greater "social responsibility" of fast-food companies, junk food manufactures, and even toy-makers to limit advertising to children, especially on the all-important saturday morning cartoon time slots.

Now this is beyond the simple, who's actually buying the junk food, fast-food, or toys? or Where do the kids get the money for that? Rather, I wonder how we presume that advertising, wether it is potentially risky or dangerous products to kids is necessarily damaging. Isn't becoming aware of alternative goods and services almost universally beneficial.

Just because the advertisment says one thing, there is no reason to believe that individuals can't make decisions for themselves. Just because its there in front of them, why should it be considered some how coercive? Perhaps they need the reminder that no one is forced via product promotions, coupons, or advertising to consume risky or harmful goods and services.

It seems that the underlying assumption in public health officials' policies are that advertising is nearly 100% effective or that it is a coercive mechanism leading to actions against one's will or not in our own best interest.

I suppose one has to believe that individuals are rational, or that they consistently act in their own best interest, (wether the activity be highly risky or risk free) to not buy into the public health arguments. I for one am of that opinion.

Well, I often have problems with applying rationality assumptions to children. In fact, rationality assumptions can only take our understanding of human behavior so far (behavioral economics has its place too), but it takes us almost no where with children.

Would anyone seriously try to used rationality assumptions and revealed preference to argue that a child drinking draino is "obviously" maximizing his utility?

I think if we really want to argue that banning "dangerous" advertisements to children is wrong, we have to make it an issue of parenting and who really has the right to be paternalistic.
I think this goes back to the same argument we were having last week about the drinking age, smoking, etc - at what age do we think individuals are rational?
My shock-value short-answer would be "never".

Human beings never "growup" to attain the unbounded rationality assumed in our intermediate micro courses.

For example, even if perfect information were available, actual human beings only have so much cognitive power to sort through all it we develop simple heuristics to make decisions instead. Depending on how loosley you want to define "rationality", this could be considered a "rational" responce to a new constraint, but these heuristics (rules of thumb) can lead to systematic errors in human behavior. Certainly not what our traditional conception of "rationality" predicts. From a utilitarian/efficiency perspective, this opens the door for interventionist policies that could direct these errors to make people better off (forced savings programs have popped up recently, for example).

More realistic models of human behavior have been proposed by behavioral economists. For more information on their work and "bounded" rationality, check out this website.
Another example of suprising results from the behavioral sciences:

We may have no idea how happy we are, were, or will be.

So they say anyways.
I have to say that rationality, is a valid assumption to make for nearly everyone. Individuals, even with limited information, will tend to pursue activites that are in their own best interest. They don't need to have all of the information and be "right" all the time. The fully rational being is both unrealistic and inappropriate.

Additionally, whosoever decides what is "rational" is making a purely subjective claim. What is irrational? How should someone act? What outcomes should be attained?

The issue with most decisions involving children don't have to deal with an individual child's rational ability, but rather with a parent's "parental rationality" or rational parenting. Are parents generally acting in the best interest of their children. I think that is true statement. How can one easily prove otherwise except in cases of abuse and death (and perhaps not even then)?

On the two year old drinking Draino, this has little do do with rationality. I am not sure, who would consider any child of that age a rationalizing agent. They are not even capable of self-realization, nonetheless rational decision making.
"I have to say that rationality, is a valid assumption to make for nearly everyone."

"Additionally, whosoever decides what is "rational" is making a purely subjective claim."


"On the two year old drinking Draino, this has little do do with rationality. I am not sure, who would consider any child of that age a rationalizing agent. They are not even capable of self-realization, nonetheless rational decision making."


Though that would seem to contradict your first claim that rationality applies everyone. And I'm not sure how either square with your second argument that describing what is rational is subjective. If it truly is subjective can you objectivley say that rationality applies to everyone or that it doesn't apply to children?
The way that it is normally used in making policy and economic arguments is for my first statement. And I did say nearly everyone.

Irrationality can not be easily proven. So it seems fair to assume rational most of the time. That's the second statement.

The third is a response to Nathan. Economics, legislation, and policies aren't based on the questioned 'rationality' or decision-making ability of a two year old consumer.
My point from my last post is that the assumption of rationality can really only be used for agents that can act both rationally and irrationally.

That sort of assumption is not necessary for some "arational" (without rational ability) individual, because they are incapable of attaining it. The mentally ill, developmentally disabled, all children under a certain age(probably five), and some children and adults above that age.

How we should treat them exactly is unknown to me, but the assumption of rationality seems rather inappropriate since they are incapable attaining it in the first place.
Sorry about my misunderstanding of your post. :) Thanks for setting me straight. Let me clarify my post as well so we both know what each other is saying.

First lets define rationality. I would say a good rough definition for it would be economic agents are rational when they seek to maximize their utility subject to some budget constraint. We model this as a typical constrained optimization you would see in any multivariate calc course.

To a certain extent we can test this definition to see if it actually conforms to human behavior. That's a lot of what behavioral economists do, actually. And a lot of what they're finding indicates that this human behavior doesn't conform to this basic assumption.

I have already mentioned a few examples. One was the fact that some happiness researchers are finding that people are not good at judging how happy they are. Now knowing how happy you will be if you buy product X makes it very difficult to optimize that happiness.

For more examples check out this website. This is an econ encylopedia article on Behavioral Economics.

Rationality serves us well for approximations. But we need to realize it only takes us so far.
It's because I spend too much time reading this stuff from you guys that I can't remember what the Door wanted when he asked for me define rational on his final. AAAARGH! (Still got an A).
I had mentioned 12 year olds due to experience. After working at a bording school that dealt with at-risk kids for eight years I came to expect a lot of 12 YO boys. With 2 of my own (4 and 6) I can likewise acknowldge the draino example.
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