Advertising has both a social and economic impact. Its socio-cultural effects relate to whether advertising creates or reflects the values and life-styles of members of society. Advertising can have adverse effects when it persuades consumers to buy things they do not absolutely need, when the differences among competing producers are slight or non-existent, and when it induces false beliefs in the consumer about the capabilities of particular products. Criticism of the economic effects of advertising is generally based on the resultant misallocation of economic resources, since consumers spend more than they would if they had a genuine choice. This is particularly the case with products characterized by high advertising-to-sales ratios and a low level of informational content.
Institutional and commercial advertising may be powerfully suggestive in their use of motivational psychology. Advertisements can affect voting behaviour, purchasing habits, styles of dress, speech and mannerisms, family and social relations, use or non-use of stimulants, and many other aspects of life. Advertising can thus create, destroy or change values. The power of advertising is abused when it is intentionally deceptive and when it withholds information needed for informed judgement. In the health area, advertising may have harmful effects on nutritional intake; on recovery from illness; on occurrence of accidents and some crimes; and on emotional and mental health.
Advertisers in all branches of industry are failing to make responsible contributions, by sufficiently legitimate and complete descriptions and claims, to social needs. Proof of this is provided by the growth of consumer movements and the increase in international governmental investigations and regulatory enactments. The social needs neglected by advertisers include population planning, use of natural resources, levels of safety, pollution control, and individual freedom of choice. The consumer movement also calls attention to the irresponsibility of some governmental advertising, press conferences and programme publicity. Special cases are the advertising and promotion engaged on by the military-industrial complexes for armament expenditures, the political education and propaganda advertising used by centrally planned countries, and censorship. Commercially, the equivalent may be the highly selective data that appears on package labelling.
Advertisements addressed to children or young people may contain statements or visual presentations which might result in physical, mental or moral harm to them. Such advertisements may take advantage of the natural credulity of children or the lack of experience of young people and may strain their sense of loyalty. Advertisements may also take advantage of the hopes of persons suffering from illness, or of an impaired ability on the part of such persons to judge critically an advertisement holding out the promise of a cure or recovery from illness