"Advertisements lead to wasteful expenditure." Present an argument against this statement.

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Advertisements can be used to alter the perception of items as wanted, to needed (and therefore not wasted). Or, they can be used to modify existing spending habits (e.g. switch brands).

One can also argue that advertisements limit or reduce wastefulness. For example, adverts for a bank with a lower interest rate or a clothes sale. In both of these cases the product is required (home loan, general clothing), but the consumer could be persuaded to buy the product at that time, but with a lower total expenditure.

Another example of this could be an old heater. The heater is inefficient (compared to more modern models) and therefore is costing more to run. An advertisement could impart knowledge about a new (efficient) heater that will incur a lower total cost over the lifetime of the product.

Looking at this statement from another perspective - inside the company - we find that advertising is not indicative of wasteful expenditure. Without the advertising the brand image, reputation and product knowledge would not reach the consumer.

The article linked in the references (below) presents the other side of the argument - how advertisers convince us to spend more.

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This statement is only true (one can argue) if we take a very broad, uneconomic view of the word “wasteful.”  In order to justify the statement, one must conclude that spending on things that are not needs (but are only wants) is inherently wasteful.

To an economist, anything that a person wants to buy and is able to buy is not wasteful.  People have the right to choose what things they want and do not want.  So long as their desires are being fulfilled, they are not wasting their money.  Therefore, advertising does not lead to waste.  Instead, it simply helps to alter what wants people have.  As long as it does not compel them to buy things they do not actually want, it does not cause waste.

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