Manufacturing Preferences

On Easter Sunday 1929, a group of women walked down Fifth Avenue in New York City smoking cigarettes. They had been hired by Edward Bernays, a publicist working for the American Tobacco Company, to light up in public and treat their cigarettes as what Bernays called “torches of freedom.” Women smoking in public was a social taboo; framing the act as feminist defiance was designed to dissolve that taboo and open the female market to tobacco sales.

It worked. Tobacco companies made billions of dollars from this new market in the century that followed, while millions of women worldwide died of cancer.

Bernays was Sigmund Freud’s nephew, and he had taken his uncle’s ideas about unconscious desire and applied them to commerce. His insight was that you do not need to argue with people about whether they want something. You can create the conditions under which they will want it.

The behavioral economics post explained how people make decisions differently than the rational-actor model predicts. This post makes a related point: before you can ask how people choose, you need to ask where their preferences come from. Standard economics treats preferences as given: people arrive at markets with wants, and markets serve them. Thorstein Veblen was among the first to argue that this is not how consumption actually works. People don’t want things in the abstract; they want things based on their social position, relative to what the people around them have and display. The desire for a particular pair of shoes cannot be separated from the social meaning of those shoes in a specific time and place and to a particular peer group.

John Kenneth Galbraith pushed the argument further in The Affluent Society. He called it the “dependence effect”: the wants that production satisfies are themselves created by the process of production. Advertising does not serve existing desires: it manufactures new ones and attaches them to products. The economy doesn’t exist to satisfy people’s needs—it exists to perpetuate itself.

In South Korea, cosmetic surgery has grown into a multi-billion-dollar industry drawing patients from across East and Southeast Asia. The procedures most in demand—eyelid surgery, jaw reduction, and particular forms of rhinoplasty—track the standards of appearance disseminated through Korean entertainment products, which are themselves produced by a commercial industry with strong incentives to generate aspiration.

Digital platforms have scaled this dynamic. Algorithmic recommendation systems don’t just show you content that matches what you already want. They build a behavioral model from pauses, clicks, shares, and watch time, then serve content designed to maximize engagement. Your preferences at the end of an evening’s scrolling are partly an artifact of what the algorithm chose to show you. Recommendation systems are also preference-construction systems.

This is distinct from the nudging described in the behavioral economics post. A nudge changes how a choice is presented without altering the options. What we’re describing here is shaping what you want before you arrive at a choice. In India, skin-lightening products generate annual revenues in the billions of dollars, sustained by advertising that associates lighter skin with success, desirability, and social mobility. The market for these products—many of which contain harmful ingredients—doesn’t reflect a natural preference. It reflects decades of advertising, colonial inheritance, and film industry imagery.

Markets can satisfy preferences efficiently. What they can’t do (or rather, what the people who profit from them won’t do) is tell you whether your preferences satisfying are worth having, who created them, or why.

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Bernays2024

Edward L. Bernays: Propaganda. Martino Fine Books, 2024, 9781684228416.

Galbraith1998

John Kenneth Galbraith: The Affluent Society. Houghton Mifflin, 1998, 9780395925003.

Packard2007

Vance Packard: The Hidden Persuaders. Ig Publishing, 2007, 9780978843106..

Veblen1899

Thorstein Veblen: The Theory of the Leisure Class. Macmillan, 1899.

Wu2016

Tim Wu: The Attention Merchants: The Epic Scramble to Get Inside Our Heads. Random House, 2016, 9780385352017.