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0 pointsHerring2mo ago0 comments

> In a different world where there are higher wages, more people would have more spending power. Then companies wouldn't have to spend as many dollars on advertising, which they could split between higher wages, higher margins and lower prices.

Interesting hypothesis. I looked it up in Wilkinson and Pickett, The Spirit Level.

The authors provide cross-sectional data across 23 rich nations, showing a strong positive correlation (r~=0.70) between income inequality (Gini coefficient) and advertising expenditure as a percentage of GDP.

They attribute it to increased status competition & anxiety in more unequal societies, leading to pressure to consume more.

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gruez2mo ago

>The authors provide cross-sectional data across 23 rich nations, showing a strong positive correlation (r~=0.70) between income inequality (Gini coefficient) and advertising expenditure as a percentage of GDP.

Why only rich nations? Many of the most unequal countries are also poor (or at least, not rich), so why do they get a pass?

https://en.wikipedia.org/wiki/File:Gini_Coefficient_of_Wealt...

https://en.wikipedia.org/wiki/File:World_Bank_Inequality_202...

HerringOP2mo ago

Take a few quantitative courses (ie statistics). Roughly speaking, you usually want to compare similar-ish groups. It's like if you want to examine the effects of diet on a human body, you can't just mix old and young haphazardly. Advertising spend in Somalia probably works very different than advertising spend in Norway.

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