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The McDonald's Equilibrium: Advertising, Empty Calories, and the Endogenous Determination of Dietary Preferences

  • Smith, Trenton G

A comparison of accepted nutritional advice with actual American dietary practice suggests that many people fail to eat well in spite of well-documented health consequences. Popular culture often labels the worst offenders as lacking in “self-control,†and many blame the aggressive advertising campaigns of the fast-food and snack-food industries for manipulating consumers into poor diets, but these conclusions are not easily reconciled with a neoclassical approach to economic decision theory. This essay considers the consumer’s “diet problem†in light of emerging evidence from a number of behavioral sciences. In particular, it is argued that human evolution in the distant past resulted in an elegant solution to this problem (of search for a suitable diet in an uncertain environment), which any neoclassical economist would recognize. In modern environments, however, the signals that formerly provided information in the consumer’s search problem are subject to manipulation by food-producing firms. Confirmation by molecular biologists that many human responses to these signals are firmly encoded in our genes suggests a need to re-evaluate the welfare economics of the food industry.

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Paper provided by Department of Economics, UC Santa Barbara in its series University of California at Santa Barbara, Economics Working Paper Series with number qt0hx9x4jr.

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Date of creation: 16 Aug 2002
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Handle: RePEc:cdl:ucsbec:qt0hx9x4jr
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  1. Milgrom, Paul & Roberts, John, 1986. "Price and Advertising Signals of Product Quality," Journal of Political Economy, University of Chicago Press, vol. 94(4), pages 796-821, August.
  2. Smith, Trenton G, 2002. "Obesity and Nature's Thumbprint: How Modern Waistlines Can Inform Economic Theory," University of California at Santa Barbara, Economics Working Paper Series qt31g1m028, Department of Economics, UC Santa Barbara.
  3. Hirshleifer, Jack, 1977. "Economics from a Biological Viewpoint," Journal of Law and Economics, University of Chicago Press, vol. 20(1), pages 1-52, April.
  4. Charles Stuart, 1981. "Consumer Protection in Markets with Informationally Weak Buyers," Bell Journal of Economics, The RAND Corporation, vol. 12(2), pages 562-573, Autumn.
  5. Arthur J. Robson, 2002. "Evolution and Human Nature," Journal of Economic Perspectives, American Economic Association, vol. 16(2), pages 89-106, Spring.
  6. Hirshleifer, Jack, 1973. "Where Are We in the Theory of Information?," American Economic Review, American Economic Association, vol. 63(2), pages 31-39, May.
  7. McCall, John J, 1970. "Economics of Information and Job Search," The Quarterly Journal of Economics, MIT Press, vol. 84(1), pages 113-26, February.
  8. Robson, Arthur J., 1996. "A Biological Basis for Expected and Non-expected Utility," Journal of Economic Theory, Elsevier, vol. 68(2), pages 397-424, February.
  9. Rogers, Alan R, 1994. "Evolution of Time Preference by Natural Selection," American Economic Review, American Economic Association, vol. 84(3), pages 460-81, June.
  10. Hirshleifer, Jack, 1985. "The Expanding Domain of Economics," American Economic Review, American Economic Association, vol. 75(6), pages 53-68, December.
  11. Jack Hirshleifer, 1977. "Economics from a Biological Viewpoint," UCLA Economics Working Papers 087, UCLA Department of Economics.
  12. Klamer, Arjo, 1989. "A Conversation with Amartya Sen," Journal of Economic Perspectives, American Economic Association, vol. 3(1), pages 135-50, Winter.
  13. Richard R. Nelson & Sidney G. Winter, 2002. "Evolutionary Theorizing in Economics," Journal of Economic Perspectives, American Economic Association, vol. 16(2), pages 23-46, Spring.
  14. John Conlisk, 1996. "Why Bounded Rationality?," Journal of Economic Literature, American Economic Association, vol. 34(2), pages 669-700, June.
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