Advertising. Sometimes it provides useful information about products before you buy. Sometimes it’s a socially wasteful side-product of competition between firms (No, really, how different can two brands of washing powder be?)
I enjoyed an example of the latter every evening during my holiday last week – and it’s quite a simple example of advertising’s socially wasteful side. Pretty much every eatery we went past employed one person whose sole job was to entice people into the restaurant: through treating you like a long-lost cousin to sob stories about recent flooding via insistence about the freshness and tastiness of the food.
Why do this? If no restaurant employed a tout to stand outside, they would all save a lot of money. When they all employ touts, they aren’t increasing the number of people deciding to eat out in restaurants (i.e. they’re not expanding the market) – they’re simply fighting among themselves for those that do – leaving them all in pretty much the same position as when no touts were employed.
The problem is that the incentives of the individual restaurant firm are different to the restaurant market as a whole. An individual restaurant is always better off employing a tout. If it is the only one to do so, it gains in market share at the expense of all the rest. If all the other restaurants are employing touts, the restaurant that doesn’t loses out to the others.
Of course, this is all predicated on restaurant touts being a good way to lure people into restaurants. Which they probably will be if a) the restaurants are patronised by tourists who don’t know the quality of the restaurants and haven’t done any research in advance – via the internet or otherwise and b) wages are low, so that touts are better value, than say, leafleting.
Having said all that, the restaurant touts also had some comedy value. I spent one dinner continually staring over this blog illustrator’s shoulder at the antics of the rather matronly waitress standing outside the restaurant next door. On another day, after saying we might come back later, the waiter replied, looking rather pleased with himself, “ok, as they say in the UK, ‘TTFN!'”. TTFN? Do they? I had to wait until I got home to look this up on wikipedia: it apparently came to prominence in the UK in the second world war. Which tells you something about the age range of most of the other tourists. And perhaps further reduces the likelihood that they might have done their internet research in advance of going out for dinner.