Economists used to despise marketing

Latest revision as of 03:50, 14 September 2011

There was a time when economists were horrified by the idea of marketing and advertising. Its understandable---marketing undermines the assumptions of the market institution. It leverages the patterns of psychology and sociology to bend the laws of economics. For example, the math behind microeconomics assumes that preferences, commodityhood, objecthood, even agenthood are fixed, but with coupons, branding, bundling, defaults, advertising, advertising to children, and countless other techniques, marketing makes all of these the playthings of the seller. With sellers creating demand among buyers, and leveraging any predictability in the human psyche, I completely understand why marketing made economists nervous.

What I don't understand is what happened next, or didn't. There must have been some invisible synthesis of business practice with economic theory, because I don't hear economists being nervous about advertising. I didn't even realize that advertising presented theoretical problems until I read, in an old economics paper, a reference to an even older economics paper expressing dismay at the ubiquity of marketing in business. Maybe the old tinny ivory opinions got passed over when economics was digested for the business school?

I'll guess that the conventional wisdom fits advertising into The Grand Scheme of Things, naively or quietly accepting that want is an independent measure of value. Whatever role straight mathematical microeconomic theory plays in the functioning of today's market-mediated society, it is much smaller or much different than we imagine.