Accounting For Tastes: A Simple Theory of Advertising As A Good Or Bad

“Economists, traditionally, have had a very uneasy relationship with advertising,” says University of Chicago professor Gary Becker. “Consumer preferences were thought to be either too stable or too easily manipulated.” But in his latest book, “Accounting For Tastes,” Becker employs the tools of modern economic analysis to confront the problem of preferences and values — how they are formed and how they affect our behavior. In a chapter from the book, Becker and co-author Kevin Murphy, professor of economics and industrial relations at the University of Chicago Graduate School of Business, apply the economic theory of complements to advertisements and challenge the traditional characterizations of advertising itself.

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