Copenhagen Interpretation

by John Q on June 4, 2004

How would you rank the following priorities for making the planet a better place?

* A major improvement in health in poor countries, saving millions of lives each year

* Substantial progress in reducing the rate of climate change, preventing large-scale species extinctions and other environmental damage

* New and improved advertisements for consumer goods

You don’t have to be Bjorn Lomborg to agree that, given the choice, improvements in health should get top priority. And you don’t have to be Vance Packard to think that the benefits of advertising, if they are positive at all, are trivial in relation to the first two choices.

In fact, however, countries in the developed world currently allocate about 1 per cent of its income to the advertising industry (this excludes the cost of the TV programs and so on financed out of advertising revenue), far more than to either development aid or climate change. The US, for example, spends about 0.1 per cent of GDP in development aid, and almost nothing on programs to mitigate climate change. If we were all prepared to watch the same old ads, instead of getting new ones every year, we would have enough money to finance either the proposals of the Commission on Macroeconomics and Health or a climate change mitigation program substantially more ambitious than the Kyoto protocol.

The fact that we don’t raises a couple of issues. First, our priorities are seriously screwed. We should all be making more noise, more of the time, about the need to increase development aid, as well as personally giving more than we do to aid organisations. I don’t claim to be much better than anyone else in this respect, though I do try from time to time.

Second, comparisons of this kind are clearly tricky. Even if we all agree that too much is spent on advertising, there is no easy way, in a market or even mixed economy, of stopping firms spending money to promote their products, let alone of redirecting any savings to socially desirable ends. Similarly, and contrary to Lomborg’s implicit premise, there’s no easy way of making a trade-off in which we decide to do nothing about climate change and instead to spend the money on improving the health of the poor.

Third, given that high-priority needs are going unmet, it’s hard to reason properly about social costs and benefits. The Copenhagen Consensus exercise illustrates this. It’s quite reasonable to say that, given the choice, clean drinking water for the world’s poor should rank ahead of mitigating climate change. But is this the appropriate comparison? If Kyoto goes ahead, it won’t be financed out of aid budgets. In fact, to the extent that emissions trading is involved, poor countries will actually benefit. So the appropriate comparison is between mitigating climate change and maintaining higher levels of consumption (including the advertising that is part of that consumption) in the rich countries.

Assessing the cost-benefit issues here isn’t easy, and I doubt that the members of the Copenhagen panel have managed, in the course of five days looking at a whole range of issues, to come up with better answers than those that have been found so far. There’s no easy way of putting a monetary value on species extinctions, the loss of coral reefs and so on, and there are also tricky conceptual issues about discounting. I can only say that I would happily accept an income cut of 1 per cent if even half of the damage projected by the IPCC could be avoided (some warming is, of course, inevitable).

It would, of course, be reasonable for Lomborg, and others who’ve participated in the Copenhagen Consensus exercise to say that climate change is a second-order issue and that it is far more important to devote attention to AIDS and other health issues. Lomborg could start at home if he wanted to. Denmark has been one of the few countries in the world that gives 1 per cent of its income in development aid. But the same government that appointed Lomborg to run its Environmental Assessment Institute has also cut foreign aid repeatedly. Lomborg is a figure with a world profile who could certainly bring some pressure to bear to have this decision reversed. If I does so, I’ll be the first to cheer him on.



Brett Bellmore 06.04.04 at 11:10 am

Technically, the fact that we spend more on advertising than climate mitigation in no way implies that actually IMPLEMENTING kyoto would be cheaper than advertising. Essentially all we’ve done is TALK about climate mitigation, and that’s darned cheap.

And why would we even consider implementing a treaty the Senate rejected 95-0?

Anyway, I’d have thought that the real obstacle to reducing advertising wasn’t the market economy, but this little thing called freedom of the press. I know the courts have (illegitimately) given advertising 2nd class status, but that’s a long ways from no status at all.


john b 06.04.04 at 11:50 am

“Why would we even consider implementing a treaty the Senate rejected 95-0?”

You might, err, decide that the Senate was wrong? It’s been a few years since I studied the Constitution in any depth, but I don’t think Senator votes have ex cathedra infallibility.


john b 06.04.04 at 11:50 am

“Why would we even consider implementing a treaty the Senate rejected 95-0?”

You might, err, decide that the Senate was wrong? It’s been a few years since I studied the Constitution in any depth, but I don’t think Senators have ex cathedra infallibility.


john b 06.04.04 at 11:56 am

And nor do I, clearly. Sorry for multipostage – anyone with the power of deletion feel free to delete.


Chris Bertram 06.04.04 at 12:11 pm

On the costs and benefits of Kyoto and surrounding issues, Brad DeLong made “a great post”: just under two years ago. There’s no use wittering on about costs and benefits without considering who bears the costs and who gets the benefits. The core point:

bq. … those who will suffer from global warming are largely in the global south. If global warming does (say) increase the magnitude of major typhoons and does raise the sea level a bit, by the latter part of this century more than 100 million people in the Ganges delta will be at risk of drowning if a high tide accompanies the storm surge of a major typhoon in the Bay of Bengal. The managers and shareholders of companies like Halliburton that will gain from inaction on global warming are a different and distinct group from the tropical peasants who stand to lose their health and their lives. Any claim that “instead of Kyoto we should be doing X” has to be accompanied by a plan to actually do X. Otherwise, the claim that inaction on global warming enhances world welfare is likely to be very false indeed, as it is hard to believe that on the scale of human happiness higher incomes in the global north will outweigh nastier, more brutish, and shorter lives in the global south. It is one thing to say that the resources the Kyoto Protocol wants to use to fight global warming could be used to provide first-class public health and economic infrastructure to the global south. It is another to say that these resources, instead, will be used to get every American household a second DVD player and every tenth American household a power boat.


rea 06.04.04 at 2:06 pm

Comparison’s like this are always misleading; this one neglects the place of advertising in the over all economy.

Less money spent on advertising means fewer consumer goods sold. Fewer consumer goods sold means fewer jobs making and selling consumer goods, not to mention less profits. Fewer jobs, less profits means a reduction in GNP and cosnequetnly, less money available from the developed world for things like health care in poor coutnries, or dealing with global warming.

The trade-off is never so simple as taking money from one thing and applying it to another.


Alex R 06.04.04 at 2:26 pm

rea wrote: Less money spent on advertising means fewer consumer goods sold.

Really? Do you have any evidence to back that up? I strongly suspect that most advertising simply works to redirect consumer spending from one item to another, and not to increase the total level of consumer spending — which is mostly determined by income and propensity to save.

And even if a reduction in advertising did cause consumers to save more and spend less, would this necessarily be bad for the economy, considering both the low savings rate in the US, and the not easily quantifiable but definitely real gains in quality of life from a reduced level of advertising.


Robert Lyman 06.04.04 at 2:37 pm

But…aren’t ads and climate change policy paid for by different people? I mean, I wasn’t aware that all advertising expenses in the US came out of the Treasury, but if you say so…

Seriously, even if it were possible, legally (which it isn’t), for the US government to ban “new” advertisements, and tax at 100% the money that would have been spent on them, that would have at least a few minor distortionary effects, no?

It’s just dumb to compare apples and oranges. Lomborg is surely guilty of this (Kyoto and clean drinking water do not come from the same budget), but there’s no reason to compound the problem. After all the incomprehensible and high-minded philosophizing about infinity you’ve been doing, I would expect you to be able to avoid a simple, straightforward fallacy like this one.

As a second point, you call for increases in development aid, and implicitly, in public-health aid. Any evidence that these do any good? There’s a fair amount of evidence that a goodly fraction of foreign aid just winds up either subsidizing an oppressive military or sitting in Swiss bank accounts. Not sure why these are considered desireable outcomes.


Eric 06.04.04 at 2:47 pm

Alex, your argument is flawed, look at the last 3 years of the US economy. The economy tanked, people got worried, started spending less. Corporations lost profits, got worried, started cutting jobs, people got more worried, started spending even less. Its an economic death spiral. Yes some of this can be explained by the events of 9/11/01. But economies go into recession occasionally and sometimes without cause, this was a little worse than some, but not as bad as say Black Tuesday.


dsquared 06.04.04 at 2:48 pm

Robert, two points:

First, apples and oranges are both fruits, both about the same size, cost about the same and have similar nutritional value. They’re about the most eminently comparable things I can think of. If I had an apple and you had an orange, I think we’d both agree that we had roughly the same amount of fruit, and if we decided to swap, we’d almost certainly settle on an exchange rate of one apple per one orange. (Sorry, I know, but I just really hate this metaphor)

Second, I think you’re misunderstanding John’s point. He’s more or less in agreement with you; since there is no realistic proposal to switch expenditure from one use of funds to another, it is somewhat disingenuous to pick on Kyoto as the thing which we should stop doing as it is less important than some other policy priority.


Markus 06.04.04 at 3:10 pm

Not that it in any way relates to the purpose of the post, but I take issue with your first claim. It is not clear to me that mitigating species extinction is not more justifiable than improvements in health. Qualifiers about how large-scale these extinctions will be or how major improvements in health will be make all the difference, but ethically speaking, I’d likely disagree.

While we’re being hypothetical how about a consensus to stop the developed world’s expolitation of the developing world’s natural resources? Fair exchange might mitigate conditions that cause both health problems and species extinction.


Robert Lyman 06.04.04 at 3:13 pm

Well, fine, then, d^2 Australian Shiraz and Washington State Chardonnay, or elephant turds and tickets to Farenheit 9/11, or, hell, this isn’t working for me.

Moving right along, If John is using his adverstising comparison as an illustration of the absurdity of the Copenhagen excercise, then fine, I agree with him.

I suppose it would be fair for Lomberg to reply that he is indeed allocating a single scarce resource, namely “public and bureaucratic attention,” and that this does, in fact, come from the same “treasury.” I’m not sold on this being a zero-sum game (surely we can pay attention to more than one thing at once), but it isn’t insane. On the oter hand, nobody ever frames it that way.


BigMacAttack 06.04.04 at 3:18 pm


Why the focus on advertising? For me it confuses the issue and reduces the effectiveness of the post.

I immediately start thinking about and weighing the benefits of advertising vs x.

Those benefits don’t seem so trivial. So easily and airly dismissed.

alex r posts –

‘? Do you have any evidence to back that up? I strongly suspect that most advertising simply works to redirect consumer spending from one item to another,’

Or put another way advertising helps make our marketplace is efficient.

And the cost of an inefficient marketplace is?

I start thinking thoughts like is the cost of all new advertising for old products that conveys no ‘meaningful’ new information 1% of GDP or is the cost of all advertising 1% of GDP.

Anyone shopped for a house lately? Did advertising help you get the information you needed for a low mortgage? Did it help anyone?

I liked the post because I enjoy thinking such thoughts.

But I don’t think that was the intention of the post.


dsquared 06.04.04 at 3:19 pm

I will accept “chalk and cheese” as a valid metaphor, or for ‘edgier’ commenters “chicken soup and chicken shit”. Readers of a literary bent might have a go with “lightning and a lightning bug”, but I’ve never really got it ro work.


roger 06.04.04 at 3:26 pm

That we spend too much on advertising is something that stands out, when juxtaposed to how much we — Americans — devote to, say, foreign aid.
But what isn’t said about advertising is that, the less we spend, the less media there is. The last four years have been a huge advertising depression. And notice — where is Feed now? Lingua Franca? Where is Red Herring? I could name a dozen magazines. And if you look at the newspapers, you will see a lot more sheer filler, which is there in a desperate attempt to connect some jerky film with an audience, and much less of the good cultural roughage that used to be standard in newspapers. Look at the book sections of any major metro.
Advertising might be bad, but one should really consider where we are going to have our elevated discussions about climate change without advertising. I’d suggest that it would be in more and more rarified venues, among more and more ‘experts’ — in other words, it will be another triumph for the oligarchy of experts.


dairy queen 06.04.04 at 3:40 pm

Chalk and cheese doesn’t work that well either. Fresh curds are very commonly described as chalky, to capture both their friable texture and their dry feel on the tongue. a slightly underipe camembert, for example, will have a small core of chalky curd in its center. If the cheese is particularly flavorful, particularly when made with lovely raw milk, then the contrast of the slightly acidic, curdy center with the soft, mushroomy ripe outer part which still manages to retain the floral, grassy flavors of the milk can be an extremely yummy treat. Fresh goat cheese is often described as chalky. How about a young caerphilly? Hmmm, now I’m hungry . . .


abb1 06.04.04 at 5:36 pm

Advertising has nothing to do with it. It’s the military spending that needs to be discussed in this context, IMO: one government activity vs. another.


M. Gordon 06.04.04 at 5:56 pm

rea wrote: Less money spent on advertising means fewer consumer goods sold.

alex r wrote: Really? Do you have any evidence to back that up? I strongly suspect that most advertising simply works to redirect consumer spending from one item to another…

I think it’s fairly clear that, in our society, advertising works by instilling the perception that consumer goods bring prosperity and happiness, and that owning things will make you more desirable. Most advertising doesn’t pit one product against another, it tells you that the product brings bliss and that you need it. I think the level of sheer, unadultrated consumerism in our society is primarily driven by the messages conveyed by advertising, and in this sense, I think that advertising does drive consumption.

That being said, it’s not clear to me that driving down the economy by driving down consumption is bad. The idea that a strong economy is a desirable end in and of itself is a conceit of economists that we must be wary of.


Giles 06.04.04 at 6:00 pm

A second problem with this post is that it implicitly assumes that aid is beneficial. In fact as many, such Bill Easterly, have argued, there is no conclusive evidence that aggregate aid actually improves the incomes of the poorer countries. And there is evidence that some types of aid may actually lower GDP in developing countries.

So the only thing that we can say for certain is that aid may be beneficial to the emotional wellbeing of rich countries, but its effects on the poorer countries are a questionable. So the last thing we need to be doing is be “making more noise, more of the time, about the need to increase development aid”. The first thing we need to do is evaluate objectively what works and what doesn’t work in terms of aid, trade and development and then we can start thinking about allocating aid, liberalizing trade etc. This is what the Copenhagen consensus attempted to do


sennoma 06.04.04 at 6:39 pm

As a second point, you call for increases in development aid, and implicitly, in public-health aid. Any evidence that these do any good?

Plenty. I’ll just grab two examples that relate to my own research experience. Schistosomiasis has been eradicated from St Lucia by a combination of public health education and sanitation development, and there is good reason to believe that similar success could be had in, say, the Philippines (also an island environment) and even mainland China, Africa and South America. Second, AIDS related public health campaigns have resulted in dramatic drops in the rate of new infections in Brazil, and when properly tailored to local target audiences similar campaigns have had good success in Southeast Asia and Africa.

That’s not to say that development and public health aid couldn’t be more carefully, less wastefully, spent: it could; but there are successful models to follow. That some fraction of the money will be stolen is inevitable, since for starters it is passing through government hands, but that fraction which reaches its target does help people who need help. Surely a more appropriate response to the theft issue is to call for more effective oversight and greater transparency, rather than to question the value of development aid?


Robert Lyman 06.04.04 at 7:14 pm

Surely a more appropriate response to the theft issue is to call for more effective oversight and greater transparency, rather than to question the value of development aid?

Well, yes and no. Your post mentions public-health successes; I’m glad to hear of them. But that’s a little different from “development” aid, which I at least would have catagorized more as infrastructure boondoggles, money for “modernization,” etc. It would take a lot to convince me that, for instance, the aid provided to the Palistinian Authority was doing any real good.

Also, theft isn’t the only issue; the introduction of lots of foreign money and goods distorts the local economy in ways that can prevent long-term self-sufficiency.

But, taking your reflective suggestion seriously, I should ask John: Surely a more appropriate response [to one particular prioritization of issues] would be to make your own examination of the issues and identify successful programs to be expanded (and failures to be disbanded), rather than reflexivly calling for more, more, more spending?


Matt Brown 06.04.04 at 7:22 pm

The subject had me all excited! I thought I was going to see some commentary on CT about the Copenhagen Interpretation of quantum mechanics.


Alex R 06.04.04 at 7:31 pm

While I’ll agree with m. gordon that advertising does raise the overall level of consumer demand, I nonetheless get the impression that most advertiser dollars are spent in an “arms race” — the selling companies feel that they have to buy ads because their competitors do — and if it were possible (and legal) to negotiate decreased ad spending with their competitors, they would be happy to do so.

As for the effects of a decline in consumption spending (an increase in savings rate), well that depends on whether or not there is enough capital to finance enough production to meet consumer demand. If not, a decline in consumption/increase in savings might very well *improve* the economy by financing more (and more efficient) production, increasing supply, and lowering prices so that more goods can be consumed with fewer dollars. I can’t say whether or not this holds true in, say, the U.S., but seems quite possible in principle, especially considering that the “personal savings rate” is near historic lows.


Leonard 06.04.04 at 7:52 pm

You can easily reduce the amount of advertising consumed by Americans (assuming you are one).


Turn off the TV. Don’t watch the programs which are supported by commercial advertising. Don’t watch Buffy, or those reality TV shows that you love to hate. Don’t even watch public TV, with all that “underwriting”.

Turn off the radio. Don’t listen to music which is supported by commercial advertising. Buy a CD and a CD player, or do without.

If you are unwilling to do that — to stop watching the commercial TV shows that you like — then please stop whining about how you don’t like commercials. The fact is, you are revealing your preference for them, by watching them. The fact is, you do, actually, value them (for making possible the programs that come with them), more than you value food for poor people.

Instead of watching an hour of TV, work an extra hour and donate the money to OxFam.

Stop being a hypocrite, or, own up to the fact that you value the things that you do.

NB: I do watch a small amount of TV. But I am not a hypocrite. Every evening, I have the choice whether or not to watch that TV, or work for the poor, and I choose to watch TV. I value it above feeding the poor. I am responsible for what I do. What about you?


General Glut 06.04.04 at 8:11 pm

Giles has a good point. Here’s my take on it: In many instances our use of the term “development aid” is really just a euphemism for “charity”. This is not a condemnation of the act by any means. It is to recognize, however, that most aid is directed to alleviating human suffering but not in any way to “develop” a people, i.e. close the gap between their standard of living and that of the Global North. We call it “development aid” to mystify it, to tell them and ourselves that through this money and technology and skill we are going to fundamentally transform their society and our world into one more bountiful, more equal, more peaceful, more free.

If we call it “charity,” however, we admit that there is no intention of changing their society or our world, only that we aim to alleviate their suffering here and now. That is a good thing in and of itself — but it is far from “development”. Very far, indeed.


Matt Brown 06.04.04 at 8:17 pm

The subject had me all excited! I thought I was going to see some commentary on CT about the Copenhagen Interpretation of quantum mechanics.


Giles 06.04.04 at 8:34 pm

On the issue of Charity it is also worth asking – who always benefits from development Aid? If the World Bank or DFID or or US ASID or AusAid had their budgets slashed by half who’s jobs prospects would suffer most? Economists?


John Quiggin 06.04.04 at 9:27 pm

matt, surely you know by now that all advertising is deceptive!

(I’m glad someone noticed my little pun here.)


John Quiggin 06.04.04 at 9:32 pm

As the discussion indicates, all of the expenditure items in the list have the characteristic that we can’t be sure if we are going to get any return for the money we spend.

As regards setting alternative priorities, I’ll start by falling back on that perennial left favorite, military expenditure. To the extent that the Iraq war is justified in humanitarian terms, it can fairly be compared to alternative humanitarian expenditures such as the Commission on Macroeconomics and Health Proposals. Obviously, it fails.

But I’ll try to do something more substantial on this before too long.


agm 06.04.04 at 9:36 pm

Matt b, I guess that the peril of expecting truth in advertising =).

As for whether advertising drives consumption, isn’t that fairly well established? Say for example the accounts of the creation of childhood in the US in the late 19th/early 20th centuries, or the rebuilding of Japan into the uber-consumer culture after WWII (proof that consumption can get much grosser than it is in the US).

That all being said, given that you could convice people in the developed world to redirect mroe of their resources from consumption to worthier goals, how do you make sure those resources aren’t used locally instead of moving them to the developing world? I grew up on the US-Mexico border, and it’s easy to see how people could say, “Geez, let’s put some of that money into the county hospital before it closes”, or “The third world is coming here anyways, so we might as well use the money here”. Whether or not these are valid arguments, people would throw them out because it’s not as if there aren’t people starving or lacking medical care here.

Complete tangent: Having done so myself, I can sympathize with the comedian who has said regarding those infomercials, “Seventy cents a day? No way, no one could eat that much ramen. … It was really depressing to realize that people in the third world were eating better than I was”.


Robert Lyman 06.04.04 at 10:26 pm

To the extent that the Iraq war is justified in humanitarian terms, it can fairly be compared to alternative humanitarian expenditures such as the Commission on Macroeconomics and Health Proposals. Obviously, it fails.

Short term, of course. War is more expensive than just about anything else (which is why fabled “wars over fresh water” will never happen–building desalination plans is ever so much cheaper than even a day or two of war).

But long term? Jury’s out. A stable market economy and moderately liberal government–not that we have either yet–in the Arab Middle East could yeild pretty enormous dividends in terms of alleviating human suffering. Which, if the left is right about poverty and terrorism, would also reduce suffering in rich Western countries.

And for a smart guy with a 100-year worry about global warming, you seem oddly dedicated to a remarkably short-term evaluation of Iraq. If I were using the same standards you apply to Iraq to judge the climate change debate, I’d be bitching that it’s colder in Washington DC today than last August, so who’s worried about warming?

Returning to the point, on the example of Arafat’s PA (and the Oil-for-Fraud scandal), I don’t think there’s any sort of large-scale “development aid” that could have done meaningful good in Iraq.


Lance Boyle 06.04.04 at 10:46 pm

Skip the messy difficult tasks of research and implementation and “saving millions of lives”.
Get a cheap-to-manufacture drug that makes people feel healthy, and an individually-targeted relief package that makes people look healthy. End of problem.
More people! More and more people who feel good! About themselves! No matter what! No problem!

A major chunk of the current fiasco is the result of those twits in Washington doing mood-elevators. Betcha.


NickDanger 06.05.04 at 5:08 am

In fact, developmental aid is actively harmful. It empowers the parasitic state apparatus of the country getting the aid at the expense of the wealth producing private sector.

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