ROBIN HANSON: “We also seem to see overspending in medicine, law, school, investment analysis, campaign spending, and much else. A consistent pattern I think I see is overspending in areas where spending lets one associate with prestigious folks. So I suggest that much of this overspending is better explained via motives to gain prestige via association. Re ads, consider that in order for a CEO to be promoted to run a bigger firm, people at other firms need to hear about that CEO and his or her firm. Within firms, the ambitious are often told to ‘toot their horns’ and let everyone know about their accomplishments; productive people who don’t toot tend to be overlooked. Similarly, CEOs may want to overspend on ads just to make sure others hear about their firm.”

This also explains state subsidies to the motion picture industry: Politicians are using taxpayer money to buy opportunities to hobnob with celebrities.