Tuesday, February 20, 2007

Market Failure: Fake Scientist and Her Wild Pink Yam Pills

A frequent visitor of this cafe once told me that he's amazed with economist abhorrence toward banning or regulation. Well not always. The standard text-book told us that government regulation might be needed if competitive market fails to prevail. And one among reasons why market does not work efficiently is the problem of incomplete (asymmetric) information.

And this is the hilarious yet tragic example of it: the fiasco of self-proclaimed scientist turned TV celebrity and best-selling author in UK. Here is the lead:
For years, "Dr" Gillian McKeith has used her title to sell TV shows, diet books and herbal sex pills. Now the Advertising Standards Authority has stepped in. Yet the real problem is not what she calls herself, but the mumbo-jumbo she dresses up as scientific fact, says Ben Goldacre.
Certainly, if the article is correct, the viewers of her TV shows, buyers of her books, and consumers of her Wild Pink Yam and Fast Formula Horny Goat Weed Complex pills are doomed. Consumers who do not have information as Dr (err, no) Gillian McKeith has (or pretends to have), buy products with no medical value --while in fact efficiency-wise they shouldn't buy those fake products at all.

To prevent that thing happens and to rectify the market efficiency, economics allows various government related authorities to step in --Advertising Standards Authority and Medicines and Healthcare Products Regulatory Agency, in this case.

You see, mate. We don't always hate government and loathe regulation.

ps: Following Aco, I was about to post a picture. But on the second thought, I don't think the horny goat pix is appropriate here in the cafe.

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