Chipotle's ads

Business World. Chipotle vs. Science
by: Holman W. Jenkins, Jr.
May 02, 2015
Click here to view the full article on WSJ.com

TOPICS: Advertising

SUMMARY: Health-food advertising depends on the eagerness of the customer to be fooled. "Over the years the courts, in enforcing the Lanham Act, a federal law banning false advertising, have carved out a considerable zone for 'puffery.' Puffery, as one case puts it, is 'an exaggeration or overstatement expressed in broad, vague, and commendatory language. Such sales talk is considered to be offered and understood as an expression of the seller's opinion only, which is to be discounted as such by the buyer.'... Of course, because such advertising depends on the eagerness of the customer to be fooled, a better solution than lawsuits might be an education system that lowers the general level of idiocy in the population."

CLASSROOM APPLICATION: Students can evaluate whether the advertising presented in this week's Business World column improves consumer welfare. If consumer preferences are rational (about GMO foods for example), then the information provided by the advertising noted in the column could improve consumer welfare. However, if the advertising is persuasive, then perhaps consumer welfare is reduced.

QUESTIONS: 
1. (Introductory) What is puffery? Does the Lanham act, which bans false advertising, prohibit puffery as well?

2. (Advanced) What is the distinction between informative advertising and persuasive advertising? What are examples of informative advertising? What are examples of persuasive advertising?

3. (Advanced) Is Chipotle's announcement that the company plans to stop using genetically modified ingredients persuasive advertising, informative advertising, or possibly both?

4. (Advanced) What is the effect of informative advertising on consumer welfare? That is, does this type of advertising make consumers better off?