What is DAGMAR on Advertising?

How much of the demand for products and services accounted for in GDP would not exist without advertising?

• Advertising clearly increases demand for many products.  It seems like two different motives for advertising, one being competition, and the other being market penetration.  I think many more advertising dollars are spent on the latter basis than on the former. New products, in particular, with innovative features that "show" well, benefit from advertising.  Whether or not the claims and benefits of the product are true, advertising helps sell them. Advertising also serves to inform the public of available services and products, providing "information", but clearly encouraging people to have things done for them that they don't want to personally do, stimulating demand for paid services.  New products make old products obsolete.  In good economic times, e.g. much disposable income floating around, market penetration of new products and increased use of services happens, as confidence and ability to pay make these options available to more and more people. My belief is that advertising is a foundation of late-twentieth century (and current) economic activity.  A whole array of new phenomena: extreme growth, credit expansion, development of a middle class, microprocessors, etc. began around 1970. (Some discussion of this in Energy and Economics thread).  I think the volume and ubiquity of advertising has caused it to have great effects, including dome massive "malinvestment" on the part of individuals.  How much wealth has been squandered on passing fads, image items (e.g. IPhone), and on impulse purchases and how much have these ad-inspired purchases caused over extension of credit and financial hardship. I specifically have an ethical problem with the advertising of financial services, with all kinds of implied security and high growth potential for all manner of investments, but that's a separate issue. So advertising increases net consumption.  Does that make it a good thing?  Does it encourage "conspicuous consumption"?  Does it encourage waste, and, often, poor allocation decisions on the part of the public?

• Answer:

  Very little today as there are alternative ways that new or better products will become known. Mostly ads are fighting over market share, which does not provide net value.