This has something to do with the little ‘just-so’ theory I indulged myself in yesterday. Though my intention was totally non-serious (but not frivolous!), one still has to wonder if serious economic models can ever be said to ‘prove’ something — in fact, anything. This question was triggered recently by the NYTimes obiturary ofJohn Kenneth Galbraith. The key paragraph is the following:
Mr. Galbraith argued that technology mandated long-term contracts to diminish high-stakes uncertainty. He said companies used advertising to induce consumers to buy things they had never dreamed they needed. Other economists, like Gary S. Becker and George J. Stigler, both Nobel Prize winners, countered with proofs showing that advertising is essentially informative rather than manipulative.