Love it or hate it, advertising can boost life satisfaction

According to an ASU marketing expert's new research, reducing marketplace uncertainty through advertising has positive effects on consumers.

Most of the time, advertising shows happy people. They're laughing, dancing, having outdoor adventures, socializing with friends, and generally living the good life with visible satisfaction. As it turns out, advertising is more likely than not to help real-world folks live with greater life satisfaction, too. That was the finding of research conducted by Michael Wiles, an associate professor of marketing.

Split decision

The debate over advertising's positive or negative impact on society and citizens is decades old, and it can be summarized into two views, Wiles says. "One is the persuasive view, which would suggest that advertising can shift consumer consumption norms. Advertising can increase materialism because it creates a deficit in consumers' lives and then showcases a product or service that can solve that deficit."

U.S. humorist Will Rogers wryly summarized this view when he said, "Advertising is the art of convincing people to spend money they don't have on something they don't need."

The other view, Wiles explains, "believes that advertising provides valuable information to consumers about different consumption options. It's an effective information dissemination mechanism that individuals rely on to gain knowledge about products and services available to them."

So, how do these two views relate to life satisfaction?

Wiles and his research colleagues note in a recent paper that materialism has been linked to depression and negative interpersonal behaviors like envy and lack of generosity. The team also notes that materialistic people are more likely to compare themselves and their possessions to those of others and to trade relationships with people for relationships with objects, which leads to loneliness. In these ways, materialism becomes the driver of lower life satisfaction.

Meanwhile, the opposing view of advertising's impact says that ads can raise life satisfaction by mitigating people's uncertainty about buying options. Wiles says this view of advertising is something he's seen operating in his life. "I don't know anything about buying shingles for the house, baby monitors, or non-alcoholic beers," he notes. "I recognize that we all buy a lot of duds, and spending your hard-earned money on products you don't necessarily know are right for you is frustrating."

That's called marketplace uncertainty. "People just don't like uncertainty," Wiles adds. "Uncertainty, in general, is associated with negative emotions such as fear, sadness, anxiety, and worry."

Wiles and his team pointed out that we all spend a lot of time consuming products or thinking about consuming products. They reasoned that reducing marketplace uncertainty can likely have a positive effect on people's expressed life satisfaction.

Given that both views are plausible, Wiles and his team tested them in a neutral and nuanced way. The team used data from 76 countries over the 2006-2019 timeframe. They found that overall, per capita ad spending correlates to higher aggregate measures of life satisfaction. They also uncovered some factors that can make this relationship negative.

Moderation in all things

There are moderating factors for both the positive and negative impact of advertising on life satisfaction, and they relate to country-level conditions that could affect how people perceive and react to advertising. The research team identified these factors and explained how and why life satisfaction can rise and fall with ad spending.

In their statistical modeling, the researchers considered economic inequality, the level of marketplace competition, the amount of perceived corruption, regulatory issues, cultural institutions such as religion, and the amount of social support that characterized the nation.

To measure life satisfaction, this team used the Cantril Ladder scale from the Gallup World Poll, an annual survey conducted since 2005. This scale invites survey respondents to imagine a ladder with 10 steps, where the top step represents the best possible life a person can live and the bottom represents the worst possible life to endure. Then, the person is asked to identify what step he or she is standing on.

People's responses each year to this survey question were the measure of life satisfaction in both the statistical and lab experiments the researchers conducted. They also used survey responses that informed the UN World Happiness Report. The scholars' data analysis "strongly suggests a positive effect from advertising on life satisfaction," Wiles says. That's the study's overall finding, and this effect is weaker "when there are other marketplace factors that would reduce an individual's need for information about the marketplace options to reduce uncertainty."

These factors include a high level of competition. "When there's a high level of competition, you understand that the overall quality of products and services offered is probably going to be high because companies in a strong market have to continuously improve their products to be successful," Wiles explains. This means people have less marketplace uncertainty, and competition dampens advertising's positive impact on life satisfaction.

On the flip side, if consumers are in more corrupt countries, they need the information advertising provides. After all, advertising offers a direct communication channel between consumers and companies, but it's not cheap. "Individuals recognize advertising as a costly signal and place more weight on it," he continues. "They also need more information to reduce uncertainty in a corrupt environment." Consequently, the research showed that the relationship between ad spending and life satisfaction was more robust when a country's perceptions of corruption were high.

Another factor that had an impact was religion. When it comes to religion, Wiles explains that "Protestant culture is more focused on individual achievement. As such, Protestants would be more susceptible to social comparisons that can underlie materialism, providing a negative pathway between advertising and life satisfaction."

Catholicism and Eastern religions like Buddhism and Taoism have less emphasis on material possessions and social comparisons, which mitigates the negative impact of advertising. As anticipated, the research team did see advertising having a more positive impact in countries where the religion was predominantly Catholic or an Eastern faith.

In addition, prior research has found that some countries prioritize avoiding uncertainty. These include Germany, Italy, Belgium, Greece, Guatemala, Portugal, Mexico, Japan, and South Korea. As expected, ad spending and higher life satisfaction correlate in those areas.

One factor examined — the perception of economic inequality — didn't show much difference in advertising's impact. Life satisfaction rose 5.3% in countries with low economic inequality and 5% in countries with high inequality.

However, the team did additional research in laboratory settings in the U.S. and Europe. In one lab experiment, 400 test subjects were shown either 16 or four ads about electric vehicles, something many of us feel a little uncertain about. For those who perceived their society had little inequality, life satisfaction dropped after exposure to more ads. The research team theorized that the perception of little inequality made people feel like everyone is entitled to the goods they see advertised. That view could lead to materialism, which affects life satisfaction.

Overall, however, the research team found that advertising's positive impact on life satisfaction outweighs its negative impact when viewed nationwide. It reduces marketplace uncertainty, which is why the effect is more pronounced in countries with less competition and more corruption.

Despite these findings, Wiles says his research doesn't justify more ad spending. "Our findings should not unconditionally suggest advertising can be a method to improve life satisfaction," he says. "The uncertainty reduction may not hold for all individuals, and the benefit of advertising will be mitigated by other market factors."

Wiles also cautions readers that these findings may change over time, mainly because this study focused on the views of adults, not children and youths, and the advertising landscape has changed. "We were conducting this study at a time when television was the dominant form of advertising. Social media and online advertising have greater prominence now, and it's unclear if these relationships will continue," he says.

Wiles adds, "Younger populations might be more adversely affected, either through the materialism route or other mechanisms, such as developing body image concerns. We don't know how much our findings will hold with these groups or in the future."