Canuckflack

If you can work your way through the economics and mathematical proofs, “Regulating Misinformation,” a new NBER paper from Edward L Glaeser and Gergely Ujhelyi makes some blunt observations about the economic effects of public relations, advertising - particularly by monopolies and oligopolies - and government attempts to regulate or eliminate the “misinformation” they may produce.

“…In the nineteenth century, a variety of false claims were made about the health benefits of patent medicines that were just disguised alcohol. In the 1940s and 1950s, cigarette companies tried to convince consumers that their products were healthy

… Is the appropriate policy response to ban false claims or to tax the product or to produce government advertisements with an alternative viewpoint?
One laissez-faire view is that there is little cause for government intervention because these public relations efforts are ineffective. While there are many reasons to be suspicious about government intervention, it is implausible that firms would spend significantly on misinformation if that spending did nothing.

A second view is that despite the flaws of private decision-making, government decision-making is worse … Without disputing that view, we present a simple model to examine the potential benefits of different policy responses to misinformation.

Technorati Tags: misinformation, social policy, tobacco advertising