Advertising and Product Information-Becker

Posner raises interesting and important issues, and even paradoxes, about the nature of advertising by airlines and other sectors. The specific question that starts his analysis is why airlines with relatively good on time performances do not advertise that fact? To discuss this and related issues, it is necessary to consider the nature of advertising and the role of information in advertising. The essential points of my discussion are that much advertising conveys essentially no information about characteristics of the products being advertised, that this does not mean that consumers are irrational, and that some advertisers do provide information to compare their products with those of competitors. Advertisements for soap, perfume, and many of the other products with large scale national advertising provide very little information, but try to get potential consumers to associate their products with pleasant images. A good example is the large fraction of products advertised on national television. Such ads may seem to cater to the "irrational" side of consumers, but preferences of consumers get formed in many ways, including reiteration by parents of values and morality without providing much information. Given this, it would be not surprising if advertisers often could persuade customers to buy their product without supplying a whole lot of information. Economists have generally not been friendly toward persuasive advertising since it is much easier with the usual economic analysis to discuss advertisements that provide information or misinformation. Yet tools are also available for considering the persuasive formation of attitudes and preferences with rational consumer behavior - see my book of essays, Accounting for Tastes, 1996. Although such an analysis of preference formation is dependent on some underlying psychological mechanisms that are not well understood, the process appears to be quite rational. The role of information in advertisements is complex, and varies greatly across different products, and even over time for the same ones. For example, while as Posner indicates, airlines almost never mention their online times or offer comparisons of their online records with the records of competitors, airlines do use comparisons with other airlines when advertising other characteristics. They mention sometimes how their coach seats have more room than the seats of rivals, or that their business class seats fold into a flat bed while competitors' business class seats do not, or compare their food and other service with that of others. They usually do not mention competitors by name because that is thought to give valuable publicity to rivals. Recall the old saying of politicians: "I don‚Äôt care what you say about me as long as you spell my name right." However, some advertisements show no reluctance to make invidious comparisons with the performance of rival products, and sometimes even name the rival products. Competitors to Viagra mention that the effects of their products on sexual performance last longer than Viagra does while many other drug advertisements compare the performance of these drugs with those of leading brands. In these advertisements, considerable information is provided, and usually it is pretty accurate as far as it goes, although they do not mention those aspects where the drugs advertised do not do as well as competitors. In many industries, newer products that are trying to break into a market dominated by a few leaders show no hesitation in using their ads to criticize the performance of the leading brands compared to their own brands. Then why don't airlines point out the greater delays by competitors when these exist? Of course, it would be misleading unless it was done for comparable routes since delays are more common in and out of major cities, especially during peak travel times and days, but airlines do not want to make such refined and informative comparisons. One problem is that delays usually occur on a whole air traffic grid, so that an airline that was lucky one month in having fewer delays on a grid might be unlucky the following month. This would open an airline to attack and ridicule by competitors if they tried to exploit a short-term on time advantage. Moreover, delays are so extensive mainly because slot takeoffs and landings are not sold, but are given away free to different airlines. Since many airlines benefit from free slots, they may not want to highlight delays because they fear that would cause a reaction toward selling them to airlines to cut down on delays. That said, challenging puzzles remain in using economic analysis to explain the types of information used and not used in advertisements, whether or not there are comparisons to the products of rivals. However, given all the professional time and thought that goes into advertisements, I am reluctant to claim that advertisers are not rational in what they do, for we do not understand all the relevant considerations that enter into the determination of the types of persuasion and information that are highlighted.

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