Anatomy of Advertising

> So long as the U.S. sticks to private enterprise--i.e., capitalism rather than totalitarianism--advertising as we know it will continue to be a good and indispensable thing.

Such is the all-round conclusion reached last week by the most thoroughgoing study ever made of U.S. advertising-Professor Neil H. Borden's 350,000-word The Economic Effects of Advertising (Richard D. Irwin, Chicago; $5). Nearly five years in the making, the survey kept a bead on two main concepts: 1) that advertising is "a waste and a social liability" (a familiar New Deal view); 2) that advertising makes for more and better goods at lower prices. Some findings:

> Advertising has indirectly increased national income and raised the U.S. standard of living by 1) expanding present businesses and stimulating new ones, 2) improving variety and quality of goods, 3) reducing prices by passing on to consumers the lower costs made possible by mass production.

> Advertising tends to "freeze" prices. But if they remain too high, it is so much easier for a cut-rate competitor to get into the business. The survey makes pointed criticism, however, of advertisers' tendency to spend too much in prosperity, too little in depression.

> Advertising does not account for high distribution costs--it accounts for only 7% in the total of such costs.

Critics have raised the question whether advertising did not induce citizens to buy the wrong products. In that argument, reasoned Harvard's investigators, the "clash is between the rival ideologies of individualism and authoritarianism; and the basic argument is not really about advertising at all."

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