Advertising freedom

Simon Wren-Lewis argues that tobacco plain-packaging mandates may be freedom-enhancing. He writes:

So we have individual freedom, interference, and crucially motivation. Advertising is usually portrayed as just providing information so that consumers can make informed choices. Sometimes it may do that. But advertising is often about suggesting associations, which provide no information at all. It is a mild form of brainwashing. Most of the time it is simply annoying.

For some, the information provided by some advertising might be useful. For most it is not. We can try and avoid advertising if we do not want its ‘information’, by turning the page, recording the programme and fast-forwarding through the adverts, averting our eyes, but this requires effort. Why should I have to make that effort? So for most people most of the time, it is advertising that mildly interferes with our freedom. (If I wanted to be clever, I could say that companies who advertise believe their product makes consumers better off, and therefore it is advertising that is paternalistic. However companies advertise to increase profits, not to increase consumer utility.)

So a government that prevents advertising can be seen as allowing individuals to make their own unencumbered choices. It is giving us a little more freedom and autonomy, rather than limiting it. The argument for advertising has to be that the benefits to the few in getting useful information outweighs the costs to the many in either avoiding it, or getting information they do not want. It is not paternalistic to ban advertising, just as it is not paternalistic to stop people being stalked.

Wren-Lewis is right about a few things, but I do rather disagree with him about the bigger picture here.

First off, we do indeed have plenty of models where advertising plays both informative and persuasive roles. And it is completely sane to model cigarettes as a Lancaterian good with a bundle of characteristics ranging from physical attributes like taste and burn intensity to more nebulous things like image and affiliation.

Brand affiliation for many goods is less about the physical merits of the product than it is about self-identification and self-expression, as Cass Sunstein nicely laid out a few years ago. Policies like plain packaging, that work to destroy the affiliative value of brand choice, could plausibly affect smoking rates. Similarly, a proponent of enhanced fuel-economy could insist that cars getting less than, say, 30 miles per gallon be subject to "plain car" regulations such that they had to be painted in beige, have horns that shouted "I hate the environment and probably am compensating for something" instead of beeping, and have some minimum designated asymmetry - for example, the left headlight would have to be twice the size of the right headlight. People would then be "nudged" into choosing the "right" car. On plain packaging, it's still not clear to me that the policy doesn't just push smokers to discount brands, but I suppose that the Australian data will tell us in a couple of years.

Tobacco branding and packaging is then akin to a Jaguar's sleek lines and beautiful rich colours. If Wren-Lewis wants to say that I'm brainwashed into thinking that an E-series is more beautiful than a Honda Insight, well, I'm not sure how I'd disprove that. I'm not sure he's offering a testable hypothesis there. If we stuck an Insight's body over a Jaguar's frame and engine and proved people liked it less, that's hardly evidence of Jaguar's brainwashing. We're doing more than just affecting irrelevant cosmetic or advertising details: the style is part of the product.

I disagree rather more substantially with the rest of his post. Wren-Lewis asks why the burden should be on him to avoid advertising in magazines by turning the page. The standard answer that any microeconomist would provide him is that the provision of advertising reduces the price of the magazine. Because most consumers prefer buying the bundle of "content plus advertising" at a lower price rather than content-only at a higher price, that's what's provided. At least for most publications. Switching to a "ban the advertising" equilibrium would have Wren-Lewis, and people like him, imposing costs on people like me, who are happier to have advertising and pay the lower price. How do we know which state of the world is better? Aggregate willingness to pay. Profit-seeking publishers weigh up how much they'll irritate Wren-Lewis and lose his custom against drops in profits where people like me are more sensitive to prices than to advertising. That publishers are profit-seeking rather than consumer-surplus-maximizers doesn't really wreck this result.

I'd thought this was pretty standard micro-theory. I don't get why Wren-Lewis gets to decide that the only permissable function of advertising is information-provision. In that world, we would discount to zero the utility that sports-fans get from seeing the affliative persuasive advertising for their preferred team - ads that focus on the team's logo, its chants, and perhaps some unrepresentative action shots.

Further, Wren-Lewis later argues that "the information content of the 'plain packages' [dominated by graphic ugly images] is clearly much greater than packages that were dominated by a logo. So this is one example where the information content of advertising does dominate any reduction in freedom that the advertising entails."

Suppose that smokers do find the packages dominated by big ugly warning pictures are less attractive. Is this evidence of the information content of the packaging having dominated? Hardly. Imagine that Australia had decided to run a different version of plain packaging in Tasmania. There, cigarette packages would have graphic images of slaughtered and injured animals instead of diseased lungs. There is no informational content in such images, but they are disturbing and work to break the affiliative brand utility. Like putting a Jaguar into an Insight's body.

For true paternalists, none of this matters: they know that less smoking is better for you even if you think you like it, so it doesn't matter what the mechanism is so long as it works. For those who at least still nod in the direction of revealed preference and of de gustibus, consider the uglification experiment I propose. Is it really more plausible that Oz's plain packaging regs work (if they do work) through an informational channel, or that they simply destroy part of the product's real value and thereby discourage consumption? And if you want to say that the value provided by beautiful packaging and brand affiliation is not real, think through the consequences of that position more consistently.

HT: Dick Puddlecote

Package art

The supermarket aisle is a kind of an art gallery. Every product's packaging is designed to be eye-catching; some reach the level of artwork. I love how Warhol's interpretation of the Campbell's Soup Can is now featuring as a version of the Campbell's packaging; if the limited edition were up for sale in New Zealand, I'd be buying it. The packaging can add value directly: it can be beautiful. That adds very real value, no matter what the no-logo types claim.

I've worried about plain packaging pushes on tobacco likely being extended to alcohol. Recall that there's a reasonable case that Inuit print art began because indigenous artists were curious about how the guy who painted the Player's Light packages managed to get the little sailor to look the same on every pack. And alcohol packaging can be rather pretty: variations in bottle style, label images - those are worth keeping.

NBR reports that Beck's has announced a run of bottles here in New Zealand that will feature commissioned NZ art. I've shamelessly scraped their image below, but you should subscribe.

NBR writes (paid, subscribe!) that NZ artist John Reynolds, who created the labels:

...pulled lyrics from record label Arch Hill's extensive song catalogue - featuring artists such as Family Cactus, The Clean and Street Chant - as inspiration to create the 24 multi-layered pieces of artwork. 

The article notes Beck's has been doing this kind of thing since 1987.

How long 'till we see taxpayer-supported propaganda like this directed at alcohol?

Tobacco plain packaging, if we cared about evidence

The Science Media Centre provides an expert round-up of commentary on a new paper finding, unsurprisingly, that people like branded tobacco packs more than they like plain packs. What's more relevant for policy, and what we really have no clue about, is whether changing the branding on packages has effects on aggregate sales or whether it works instead to break brand loyalty and move consumers to lower-cost no-name packs. As Professor Richard Edwards noted in his plenary address to the Oceania Tobacco Control Conference in Brisbane last October:

Plain packs have not been implemented, so evidence of the probable population impact must come from experimental studies, focus groups, surveys and so on; rather than rigorous controlled studies of the impact of the actual intervention in the real setting, as would be the ideal.

If we cared about knowing whether tobacco plain packaging has any effect, we could find out pretty easily. Set the whole thing up as a randomized policy trial. Some parts of the country get plain packs, some parts don't, and watch what happens over the subsequent few years. I'd sketched out a framework for that kind of trial back in April. Even better: if Australia is implementing the same policy, run the trial across both countries.

Instead, we're designing policy to avoid ever being able to find out whether it's had any effect. In Oz, they're bundling plain packaging with a simultaneous national increase in tobacco excise taxes. The effects of price increases will be hopelessly confounded with the effects of plain packaging unless there's reasonable ex ante state level variation in tobacco prices.

The price of cigarettes would rise to $20 a pack under a Gillard Government proposal that would reap an extra $1.25 billion a year in taxes.

The West Australian understands the Government is considering a 25 per cent rise in tobacco excise that would raise $5 billion over four years.

The plan emerged from a Treas- ury reconsideration of so-called "sin" taxes. It would repeat the financial windfall from an identical move in 2010.

The proposal is in line with long-standing advice from the National Preventative Health Taskforce and would lift the price of a pack of 30 cigarettes by $2.62.

Peter Jackson 30s, now about $18.30, would cost almost $21 under the measure and the price of Dunhill 25s would increase $2.18, taking the retail price to more than $19.50.

The excise increase may be timed to coincide with the introduction of mandatory plain-packaging for tobacco products on December 1. [emphasis added]

International research has found there is a 4 per cent fall in smoking rates for every 10 per cent increase in price. Anti-smoking crusader and Curtin University Professor Mike Daube said higher cigarette prices would discourage children and people on low incomes from smoking. "An excise increase sooner rather than later could also prevent tobacco industry efforts to subvert the impact of plain packaging by lowering prices," he said.

There are non-crazy reasons for wanting to bundle excise increases with plain packaging. If, absent brands, smokers see there being less difference between low cost off-brand cigarettes and higher cost branded cigarettes, they may substitute down to the lower cost cigarettes and then smoke more - I expect this is the main worry of the tobacco industry as they make their returns on the branded product. Consumption goes up but margins go down more than proportionately. Countering this with excise increases isn't entirely nuts if you want to curb smoking rates, but it makes it awfully hard to tell whether plain packaging does anything other than destroy the value of the tobacco companies' brands.

I still think a randomized policy trial is what's needed if we care about finding out truth rather than just beating up on Big Tobacco.

No slippery slopes, nothing to see here

Never a slippery slope to be found.

The Health Select Committee, which is to hold an inquiry into the UK Government’s recently published alcohol strategy, will look into a series of proposals including plain packaging for alcohol sold in shops, similar to a plan being considered for cigarette packets. Yesterday MPs were warned that removing well-known trademark images such as Johnnie Walker’s striding man and the Famous Grouse on bottles, could damage the Scotch whisky industry, which is worth £4 billion in exports alone. Labelling of alcoholic products is currently reserved to the UK Government, which means that if Westminster eventually agreed a ban it would affect shops and products across the whole of the UK, including Scotland. It would hit all parts of the alcohol industry, but whisky producers believe it would be particularly damaging for them.

Chris Snowdon helpfully points to assurances that they're not planning plain packaging for food.

As I'd said a couple years ago, in a different context:

I always find it depressing how folks like NORML think beating up on alcohol makes marijuana legalization more likely rather than just making for tighter regs. The hospitality industry lobbies for more restrictions on supermarket-bought alcohol to boost sales in bars; small brewers push for more punitive tax rates on big brewers... the only winners are the healthists who get support bit by bit for more regulations on everything. It's like a bunch of folks on the scaffolds complaining that the other guy's noose isn't quite tight enough. Y'all might instead direct your attention to the hangman sometime and try helping each other cut those ropes.