A new paper looks at whether spending on advertising leaves society worse off overall
, as Americans polish off their Thanksgiving feasts, a particular genre of advertisement begins to air. The details vary, but the plot does not: one family member surprises another with the Christmas gift of a luxury car, often adorned with a cartoonishly large bow. The recipient never betrays a hint of the dismay one might expect of someone whose partner has spent tens of thousands of dollars without consultation.
Some recent research suggests this might indeed be the case. A forthcoming paper by Chloé Michel, now at Swiss Re, Michelle Sovinsky of Mannheim University, Eugenio Proto of Bristol University and Andrew Oswald of Warwick University attempts to unpick the effect of advertising on welfare.
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