The Ethics and Political Philosophy of Subconscious Advertising Techniques:

An Affront on Individual Autonomy and Market Competitiveness

Kevin Fishner Duke University Honors Thesis Spring 2012

Abstract This thesis investigates the subconscious effects of specific advertising techniques on consumer decision-making. First it shows that the consumer is often unaware of subconscious advertisings contribution to her formation of first-order desires. This unawareness of a portion of the sources forming a first-order desire reduces a secondorder desires ability to alter an unwanted first-order desire. Such limitation on the effectiveness of second-order desires results in a reduction of individual autonomy. Secondly, this thesis investigates the necessary conditions for market competition, with a focus on the liberal economic requirement of voluntary exchange. As subconscious advertising distorts this requirement through its limitation of consumer choice, it is an affront on market competition in addition to individual autonomy.

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Table of Contents
INDTRODUCTION ....................................................................................................................... 3

PART I: NEUROMARKETING AND INDIVIDUAL AUTONOMY

SUBCONCIOUS DECISION-MAKING AND ADVERTISING .............................................. 5 THE ROLE OF THE SUBCONSCIOUS IN DECISION-MAKING ............................................................. 5 CONSUMER DUMBFOUDING: LESSONS FROM HAIDTS MORAL DUMBFOUDING AND PSYCHOANALYSIS ......................................................................................................................... 6 NEUROMARKETING: AN ADVERTISING TECHNIQUE THAT APPEALS TO THE SUBCONSCIOUS .... 11 ETHICAL IMPLICATIONS OF NEUROMARKETING ....................................................... 15 CONDITIONS AND CRITERION FOR INDIVIDUAL AUTONOMY ...................................................... 15 A FRAMEWORK FOR ASSESSING MANIPULATIVE ADVERTISING TECHNIQUES............................ 22

PART II: NEUROMARKETING AND MARKET COMPETITIVENESS

LIBERAL CRITERION FOR ECONOMIC FREEDOM ....................................................... 26 MILTON FRIEDMAN ON GOVERNMENT INTERVENTION IN THE CASE OF NEUROFOCUS ............. 31 FTC PRECEDENT ON SUBLIMINAL MESSAGING .......................................................................... 36 MARKET SOLUTIONS TO REDUCE THE EFFECTIVENESS OF NEUROMARKETING ......................... 37 CONCLUSION ............................................................................................................................. 38 BIBLIOGRAPHY......................................................................................................................... 39

Fishner Introduction Advertising is effectivecompanies in the United States spent $140 Billion on

advertising in 2010.1 If advertising did not have the potential to increase sales, companies would not invest small fortunes into its coffers. The market economy pushes companies to find competitive advantages over rivals, and advertising is an additional distinguishing factor besides the product. We are bombarded with thousands of advertising appeals each day, and not all of them can lead to a sale. Just as companies use advertising as a competitive advantage, different advertising techniques themselves compete for a competitive advantage. This competition has contributed to the rise of neuromarketing, an advertising technique that deliberately targets subconscious decision-making factors. This thesis will not assess the effectiveness of neuromarketing versus more traditional forms of advertising, but rather will dissect the ethics and political philosophy of neuromarketing and its deliberate targeting of subconscious decision-making. In describing the future of advertising in a neuroscience world, Jacob Braude, the vice president of strategic planning at Saatchi & Saatchi Wellness, states

Marketing professionals have spent decades working through how messaging and branding can move customers. Now, modern cognitive science has given us the keys to the kingdom by revealing how our brains use physical experiences to make sense of everything. But to use these keys we must become masters of the experiential code. This race to learn the code is set to become the next battlefield of competitive

Smith, Adam. "GroupM Forecasts 2011 Global Ad Spending to Increase 4.8%." American Association of Advertising Agencies, 1 July 2011. Web

Fishner marketing. These discoveries have the potential to revolutionize marketing and communications--and we all get to be there at the beginning.2

Braudes comments are a bit overconfidentwe may have guesses about how our brains use physical experiences, but established causal relationships have not been made. Still, marketing agencies now have greater knowledge of human nonconscious responses to environmental stimuli. These advancements in human understanding will allow marketers to fabricate artificial stimuli in order to elicit reactions in consumers. As consumers, we have limited conscious recognition of these marketing tactics, but they still influence our decisions. In understanding autonomy, this unawareness of subconscious decisionmaking influences has meaningful effects. This paper is claiming that the consumer is unaware of some factors of decision-making, but not all. It is not arguing for a direct causal relationship between subconscious and purchasing. Rather, this thesis is arguing that the unawareness of these subconscious factors of decision-making results in reduced autonomy. Since consumers cannot identify a percentage of the sources of their firstorder desires, their second-order desires become less effective in altering the first-order desires. Furthermore, the conditions for market competition have certain stipulations for individual economic freedom, and subconscious advertising techniques likely challenge these conditions if it is considered as a form of manipulation.

Part I: Neuromarketing and Individual Autonomy

Braude, Jacob. "Experience Is The Next Frontier In Marketing Experience Is The Next Frontier In Marketing." FastCompany.com. 29 Feb. 2012. Web. 1 Mar. 2012.

Fishner This part discusses the deliberate techniques of neuromarketing. The intent of

these techniques will be assessed against Gerald Dworkins definition for autonomy, and Shlomo Shers framework for determining manipulative advertising.

The Role of the Subconscious in Decision-Making Before assessing the influence of neuromarketing on decision-making, it is meaningful to first show that the subconscious is a major influence in ones overall decision-making. Antonio Damasio was one of the first scientists to demonstrate the role of the subconscious in decision-making with his Iowa gambling experiment.3 In this experiment 16 players were given four decks of cards; there were financial payoffs (or penalties) depending on the cards turned up. Players could turn up cards from any of the four decks they chose. Unknown to the participants, two decks were unfavorable; the other two had safe, small, and winning cards. It took 50 cards for subjects to articulate that they thought two of the decks were unfavorable. Well before realizing which decks were unfavorable, however, they had started turning up cards from the more favorable decks. Most interestingly, biometric responsein particular, a monitor for skin sweat had started to show changes. Thus, before consciously realizing which decks were unfavorable, participants subconsciously determined the unfavorable decks, as shown by the precursory biometric response. This experiment demonstrates the role of subconscious decision processes that people are not consciously aware of.4 Dijksterhuis confirms the criterion of unawareness as he defines subconscious thought as Cognitive
3

Damasio, Antonio R. Descartes' Error: Emotion, Reason, and the Human Brain. New York: Putnam, 1994. Print. 4 Rubinson, Joel. What Behavioral Economics Can Teach Marketing Research. Journal of Advertising Research. 50.2 (2010): 114-117.

Fishner and/ or affective task-relevant processes that take place outside conscious awareness.5 The importance of unawareness is critical, as we will see that consumers are often unaware of the effect of the subconscious advertising techniques.

Recent neuroscience studies have confirmed Damasios research on subconscious decision-making. The meta-analysis by Acker (2008)6 neatly sums up the relevant literature on the subject of subconscious decision-making, and concludes that subconscious decision-making is an active and effective way to process information. These scientific works on subconscious decision-making are important as they demonstrate that advertising techniques appealing to subconscious decision-making can be effective, and consumers are largely unaware of their effectiveness.

Consumer Dumbfounding: Lessons from Haidts Moral Dumbfounding and Psychoanalysis Haidt discusses the phenomena of moral dumbfounding to substantiate the claim that moral judgments are made on intuition, and reason is a posterior judgment on the intuitive decision.7 Take the incest examplei, unless the participant is able to understand why she feels incest is wrong, she will not be able to truly change her behavior. There is some unknown source that gives her the intuition that incest is wrong, but she is unaware of that source. Note that this thesis is using Frankfurts definitions of first- and secondorder desires, summarized as follows:
5

Dijksterhuis, A. (2004). Think different: The merits of unconscious though in preference development and decision making. Journal of Personality & Social Psychology, 87, 586598. 6 Acker, Felix. (2008). New findings on unconscious versus conscious thought in decisionmaking: additional empirical data and meta-analysis. Judgment and Decision Making, Vol. 3, No. 4, April 2008, pp. 292303 7 Haidt, Jonathan, Fredrik Bjrklund, and Scott Murphy. (2000). Moral Dumbfounding: When Intuition Finds No Reason. University of Virginia.

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Desires of the first order, which are simply desires to do or not to do one thing or another. No animal other than man, however, appears to have the capacity for reflective self-evaluation that is manifested in the formation of second-order desires.8

If she were to become aware of the source of her intuition that incest is wrong, for example an extreme aversion to inbreeding and mutant offspring, she then could apply conscious reasoning in the form of a second-order desire. Since there is a condom/birth control/ no chance of inbreeding, she would then be able to alter her first-order desire (the belief that incest is immoral) due to the increased effectiveness of the second-order desire in knowing the source of the first-order desire. Thus allowing her to state that incest in this example is not immoral because inbreeding is an impossibility. This example is difficult because incest still seems immoral, but there are more demonstrative cases. To show the strength of the claim that knowing the source enhances the individuals ability to alter first-order desires through second-order desires, consider the purpose of psychoanalysis to treat various patient conditions. Psychoanalysis is a treatment method that explores the subconscious motivators of behavior that the patient is largely unaware of.9 In its most simple form,
8

Frankfurt, Harry. "Freedom of the Will and the Concept of a Person." The Journal of Philosophy 68.1 (1971). Print. 9 About Psychoanalysis. American Psychoanalytic Association. http://www.apsa.org/About_Psychoanalysis.aspx

Fishner psychoanalysis works by bringing subconscious motivators of behavior into the

conscious reasoning of the patient. The patient is able to apply conscious reasoning to the motivational source, and take action to change behavior.10 Consider the example of a patient who is cutting herself. She understands that she has the first-order desire to cut herself, and wants to stop. Meaning she has the second-order desire to end the first-order desire to cut herself. Yet, she just cannot get herself to stop. She undergoes psychoanalytic treatment in order to discover the source of her desire to cut herself. After months of deep memory retrieval, she discovers that she still feels guilty for her mothers death in a car accident when her mother was driving to pick her up from school. By cutting herself, she is punishing herself for causing her mothers death. Now years later, she is able to reflect upon this guilt and realize that the death was not her fault, but a tragedy beyond her control. This allows her to release her guilt, and stop cutting herself as a result. Thus, by understanding the sources of her first-order desire, she is able to effectively reflect and change her behavior by means of a second-order desire. Although psychoanalysis can be effective to these lengths, the results are not always this direct. These lessons of moral dumbfounding and psychoanalysis and the importance of the sources of first-order desires can be used to elucidate the phenomenon of consumer dumbfounding. Take for example the motivations of a consumer who is on a diet, but buys a highcalorie biscuit. Although he has the second-order desire to diet and avoid high-calorie foods, he still allows the first-order desire of consuming a biscuit to manifest. But why why is his second-order desire ineffective in controlling his first-order desire? I argue that
10

Cooper, A.M. (1989). Concepts of Therapeutic Effectiveness in Psychoanalysis: A Historical Review. Psychoanal. Inq., 9:4-25

Fishner it is the same reason the woman continues to cut herself in the psychoanalysis example, and why the participant is incapable of explaining why incest is morally wrong; because the individual is unable to determine the source of the first-order desire. He may be consuming the biscuit because it reminds him of his childhood in rural Alabama. In that case, he can take out a picture of his childhood home to recall those memories, rather than eating the biscuit that defeats his second-order desire to diet. By understanding the sources of first-order desires, the consumer can more effectively control first-order desires through second-order desires. Consider the following real-world example of consumer dumbfounding. Martin Lindstrom, an advertising consultant for Fortune 500 firms, discusses one

of his advertising stints at a large beverage company with declining sales. This case study in particular discusses the graphic sweat droplets on the sides of beverage cans, which he argues are unconscious symbols that motivate consumer purchasing. He states that companies directly imbue their packaging and advertising with unconscious signals cues that lie just beneath our conscious awareness.11 Although Lindstrom does not directly state supporting sales statistics since they are company confidential, he recalls that when the executive team analyzed the sales data, the decline in sales directly corresponded with when the company removed the graphic sweat drops from the advertisements. To resurrect the falling sales, Lindstrom recommended a new type of unconscious symbol for the company to leverage. After his self-reported market testing, he landed on capitalizing on sound and its role in the subconscious. He then worked on

11

Lindstrm, Martin. Brandwashed: Tricks Companies Use to Manipulate Our Minds and Persuade Us to Buy. New York: Crown Business, 2011. Print. Pg 63

Fishner 10 the can design to create a precise snap sound when the can opened, in order to trigger craving in the consumer. Again, he self-reports that

Whenever the sound is played at sponsored events, the manufacturer witnesses an instantaneous uptick in sales. Yet when I ask people why they suddenly choose that beverage over another, their answer is inevitably I havent the faintest idea I just fell for it.12

The important portion of the above quote is that the consumer just fell for ithe is dumbfounded in that he cannot explain why he purchased the beverage. He is unaware of the source of the first-order desire to purchase the beverage. If he became aware that this can snap was a source of his consumption of an unhealthy beverage, he could take conscious measures to reflect (second-order desire) upon the first-order desire to purchase the beverage. By knowing the source of the first-order desire, the secondorder desire of the consumer becomes more effective in controlling the first-order desire. But in the current state, he is just dumbfounded about why he bought the beverage. Since Lindstrom does not provide any data to justify his claim, it is difficult to prove causality between the unconscious sound symbol and consumer purchasing. Although the causality in Lindstroms claims is

12

Lindstrom (2011). Pg 66

Fishner 11 possibly exaggerated, the claims represent the potential future in advertising techniques that deliberately target the subconscious brain, techniques which we now call neuromarketing. A.K Pradeep, the CEO of neuromarketing firm NeuroFocus, uses the phenomenon of consumer dumbfounding to promote the benefits of neuromarketing to corporations. He argues that neuromarketing allows for consumer insight even when the consumer cannot articulate the reasoning behind a purchase. If people do not have access to all the sources of their decisions and behaviors, then they cant tell us why they do what they do.13 To learn why consumers do what they do, Pradeep uses neuromarketing to (1) understand the subconscious sources of consumer purchasing and (2) leverage that information to drive more sales.

Neuromarketing: An Advertising Technique that Appeals to the Subconscious The prevalence of neuromarketing is growing in the economic landscape. There are approximately 20 neuromarketing firms in the marketplace, with NeuroFocus being the most notable.14 NeuroFocus was acquired by Nielsen Holdings in 2011, and Pradeep recently published book The Buying Brain: Secrets for Selling to the Subconscious Mind in 2010. Before getting into the details of Pradeeps work, I want to first discuss the arguments on the effectiveness of neuromarketing. At this point in time, there is inconclusive evidence of a causal relationship between advertising campaigns optimized by neuromarketing and sales increases. However, experts in the field are optimistic about
13

Pradeep, A.K. (2010) The Buying Brain: Secrets for Selling to the Subconscious Mind. Wiley: Kindle Edition 14 Dooley, Roger. Neuromarketing Companies. http://www.neurosciencemarketing.com/blog/companies

Fishner 12 neuromarketings potential.15 Dan Ariely addresses the potential of neuromarketings insight into consumer behavior in his article Neuromarketing: The Hope and Hype of Neuroimaging in Business.

It is too early to tell but, optimists as we are, we think that there is much that neuromarketing can contribute to the interface between people and businesses and in doing so foster a more human-compatible design of the products around us.16

Fortune 100 companies are similarly optimistic, as companies such as Google, Microsoft, Chevron, and PepsiCo have used neuromarketing services since 2009.17 Even though the effects of neuromarketing on consumer purchasing habits are not rigorously known, this thesis will focus upon the process and intended purpose of neuromarketing as Dr. Pradeep puts it, to sell to the subconscious mind. The goal of advertising campaigns optimized by neuromarketing is to activate subconscious triggers that incite consumer purchasing. Pradeep emphasizes how the brain both subconsciously consumes information and subconsciously makes decisions, and he uses that information in attempt to increase purchasing.

Great advertising strikes a responsive chord with consumer where it matters most: the subconscious. Only neurological testing can make the deep dive required to
15

Marin, Christophe. (2011) Neuromarketing: The New Science of Consumer Behavior. Society. Volume 48, Number 2, 131-135. 16 Ariely, Dan, and Gregory S. Berns. (2010). "Neuromarketing: The Hope and Hype of Neuroimaging in Business." Nature Reviews Neuroscience 11.4 (2010): 284-92. 17 Burkitt, Laurie. (2009). Neuromarketing: Companies Use Neuroscience for Consumer Insights. Forbes Magazine. http://www.forbes.com/forbes/2009/1116/marketing-hyundai-neurofocusbrain-waves-battle-for-the-brain.html

Fishner 13 access that level of the brain and discover how it responds to all forms of advertising, in every medium.18

He furthermore understands that consumers are often unaware of the influence of subconscious motivators.

Human brains process much of their sensory input subconsciously. This is, of course, counterintuitive because we cant think about how we think when were not aware of the thinking were thinking about!19

Although he acknowledges the consumers limited ability to reflect on subconscious thoughts, he uses it as the core of NeuroFocuss advertising strategy. Unfortunately, Pradeep nor NeuroFocus go into detailed explanations about the methods of the subconscious deep dive beyond using EEG and fMRI. Pradeep does give one example of a NeuroFocus engagement for an olive oil producer, California Olive Ranch. The company is redesigning the label of their olive oil bottle, and uses NeuroFocus to determine which of the two labels is more effective in increasing purchase intent, and if the winning label is more effective in increasing purchase intent than other olive oil competitors bottle labels.

18 19

NeuroFocus. Advertising. http://www.neurofocus.com/Advertise.htm Pradeep, A.K. (2010)

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Figure 1 - Picture from Pradeep (2010)

As a result of the study, NeuroFocus identified the orchard label as more effective than the map label in increasing emotional engagement, purchase intent, and awareness.20 Again, it is not certain whether there is a causal relationship between the consumers perception of the orchard label and purchasing the olive oil, but it is certain that the NeuroFocus recommendations were intentionally tailored to elicit greater subconscious responsesto create subconscious sources of first-order desires. Importantly, the consumer is unaware of the subconscious influence of the olive oil labeling as a source of her first-order desire. Thus, as shown by the discussion of consumer dumbfounding above, since she is unaware of a source of her first-order desire, she is less able to reflect on her first-order desire by means of second-order desire. This limitation of second-order
20

Pradeep (2010)

Fishner 15 desire results in reduced autonomy when assessed by Gerald Dworkins framework for defining and protecting autonomy. Furthermore, the deliberate intent of neuromarketing to target subconscious decision-making factors, when assessed against Shlomo Shers framework for identifying manipulative advertisements, lends to the conclusion that subconscious advertising techniques are manipulative.

Ethical Implications of Neuromarketing in Terms of Autonomy and Manipulation The following sections use the information on subconscious decision-making and consumer dumbfounding, as well as the demonstrated intent of neuromarketing to show that subconscious advertising techniques limit individual autonomy and manipulate consumer decision-making. The core conclusions of the above sections are (1) when the consumer is unaware of a source of her first-order desire, her second-order desire is less effective in controlling her first-order desire, and (2) the intent of neuromarketing is to create subconscious sources of first-order desires.

Conditions and Criterion for Individual Autonomy By defining the criterion for individual autonomy, this section sets the framework for neuromarketing to be assessed against. The purpose of the definition is not to belabor the historic debates on the subject, but rather to present a generally agreed upon definition. From here, the paper demonstrates how neuromarketing violates the conditions for autonomy. Gerald Dworkin has a foundation definition of autonomy in this field, and writes on autonomy in Autonomy and Behavior Control (1976) and The Theory and Practice of

Fishner 16 Autonomy (1988). His definition is cleanly summed up with autonomy = authenticity + procedural independence. The autonomous person is one who does his own thing,21 where his = authenticity and own = independence. Authenticity is described as the ability of man to reflect upon the present structure of his motivations.

It is the attitude a person takes towards the influences motivating him which determines whether or not they are to be considered "his." Does he identify with them, assimilate them to himself, view himself as the kind of person who wishes to be motivated in these particular ways?

Authenticity is not the process in which man acquires his motivational structures through biology, environment, culture. These are external factors that influence man without conscious decision or choice. Authenticity rather is the second-order desire to adjust his motivational structures, to reflect upon the naturally acquired motivational structures and take action to alter them.

If, on the contrary, a man resents his being motivated in certain ways, is alienated from those influences, resents acting in accordance with them, would prefer to be the kind of person who is motivated in different ways, then those influences, even though they may be causally effective, are not viewed as "his."22

21

Dworkin, Gerald. "Autonomy and Behavior Control." The Hastings Center Report 6.1 (1976): 23-28. Print. 22 Dworkin (1976)

Fishner 17 In the above situation authenticity, the ability of reflection, allows man to be autonomous. He acknowledges that the present motivational factors are not his, and thus takes action to make them his. The other half of authenticity, procedural independence, is encapsulated by own. Dworkin elaborates that ones actions can be his, but not necessarily his own. However, both are necessary conditions for autonomy. Procedural independence is the formation of second-order desire (authenticity) without external influence in the form of deception, manipulation, or withholding of relevant information, thus allowing for authentic motivational factors. Autonomy is authenticity under the conditions of procedural independence. Authenticity identifies his motivational factors, and then procedural independence allows him to adjust them without manipulation or deception in order to meet his authentic second-order desires. Difficulty arises in characterizing external influences on authenticity, as the definition does not want to rule out influences that make him more self-aware, such as education, additional information, or application of reason. Yet the definition does want to excise manipulation and deception. Specifically, procedural independence insulates authenticity from methods which interfere with the ability of the individual to reflect on his first-order motivations.23

23

Dworkin (1976)

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The above graphic demonstrates how autonomy arises from authenticity, as preserved by procedural independence. It is acknowledged that some forms of external influence on procedural independence, such as education, are in fact beneficial for authenticity. Below are ways in which outside influence can hinder the formulation of authentic second-order desires.

There are various ways, in principle, that such interference might take place. There might be methods which keep the agent in ignorance of the true determinants of his behavior. Methods which rely on causal influences of which the agent is not conscious are of this nature.24
24

Dworkin (1976)

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As shown by the above case studies, neuromarketing is one such method in which the agent is not aware of its influence, which keeps him ignorant of the true determinants of his behavior, or sources of first-order desire. Dworkin further stipulates that these must be causal influences. While one could argue that neuromarketing is not causal in that it does not necessarily cause increased purchasing, it still is a causal in that it is an influence on behavior. That behavior does not have to be purchasing the product, but could be increased awareness of the product, longer viewing of the product commercial, etc. Thus it is casual in that it affects the ways in which the consumer interacts with the product. Although Dworkin outlines seven guidelines for the preservation of autonomy, three are specifically relevant to neuromarketings violation of autonomy: 1. Methods of influence which are destructive of the ability of individuals to reflect rationally on their interests should not be used.25 2. Methods which rely essentially on deception, on keeping the agent in ignorance of relevant facts, are to be avoided.26 3. We prefer methods of influence which work though the cognitive and affective structure of the agent, which require the active participation of the agent in producing the change, to those which short-circuit the desires and beliefs of the agent and make him a passive recipient of the changes.

25 26

Dworkin (1976) Dworkin (1976)

Fishner 20 I will focus on statements one and three, as they are best shown by the advertising studies described above. Neuromarketing is destructive of the ability of individuals to reflect rationally on their interests in its creation of subconscious sources* of first-order desires. As shown in detail above, when the consumer is dumbfounded and unaware of the sources of his first-order desires, the ability of his second-order desire to control his firstorder desire is limited. Thus, he is not able to reflect (second-order desire) on his interests (first-order desire). When a consumer is able to pinpoint the subconscious source of a first-order desire, she is able to reflect and take measures to amend the first-order desire. Dworkin also stipulates that autonomy prefers methods of influence whichrequire active participation of the agent in producing the change. Pradeep demonstrates that neuromarketing is quite the opposite, as it intentionally targets subconscious decision-making. The subtitle of his book is Secrets for Selling to the Subconscious Mind, and states that the subconscious of the consumer is what matters most for targeted advertising. It is quite clear that he is not trying to work through the conscious processes of the consumer. As neuromarketing keeps the consumer unaware of some of the determinants of his behavior, limits the ability of the consumer to reflect on his interests, and intentionally targets subconscious decision-making, it is an affront on autonomy.

Defenses of Neuromarketing ands its Affect on Autonomy There are few defenses of neuromarketing and its affect on autonomy since it is a recent technique. However, there are many defenses of advertising as a whole that can be
*

Note: I want to be clear that there is no issue in targeting conscious consumer decision-factors, as those can be reflected on by second-order desires.

Fishner 21 slightly modified in attempt to defend neuromarketing as well. Many arguments hinge on the premise that second-order desires can consciously correct first-order desires, regardless of the awareness of the sources of the first-order desires. John Bishop presents one such argument, as he defends advertising on the grounds that second-order desires can control unwanted first-order desires.

It is assumed that irrational and unwanted desires threaten a persons autonomy unless the person can control them. It is argued that the origins of a desire are not relevant to a persons autonomy if they can reflectively asses that desire relative to their interests, aims, and life plans, and if such reflection can create second-order desires that control the motivational force of the original desire.27

In arguing that the origins of a desire are not relevant to a persons autonomy, Bishop does not acknowledge the extent of the influence of subconscious sources of first-order desires. As discussed in detail above in the cases of psychoanalysis and moral dumbfounding, understanding the sources of first-order desires increases the ability of second-order desires to control first-order desires. This control, which is essential to Bishops argument, it not as effective as he hopes without an understanding of the sources of first-order desires. Bishop further presents a hypothetical in which a second-order desire is ineffective in controlling a first-order desire. However, he says that there is no evidence of such a situation.
27

Bishop, John (2000). "Is Self-Identity Image Advertising Ethical?" Business Ethics Quarterly10.2 Print.

Fishner 22

It would threaten a persons autonomy if an image ad created an unwanted desire that could not be resisted and if the second-order desire was rationally grounded. Whether significant numbers of people tend to be put in this situation by image ads is an empirical question; I know of no evidence that they are.

To be fair, Bishop presents these arguments in the case of image ads, not neuromarketing. I would certainly be interested in his opinion on considering neuromarketings effect on autonomy. Still, this thesis presents evidence of the quoted situation of an unwanted desire that could not be resisted. Again, consider the dieting consumer who buys a biscuit. He has the second-order desire to diet, and the first-order desire to consume a biscuit. Since he is unaware of the subconscious sources of his first-order desire, the ability of his second-order desire to control his first-order desire is limited. This is similar to the situation of an individual who is cutting himself and undergoes psychotherapy in order to discover the source of this desire. Thus, as neuromarketing threatens autonomy in precisely the way Bishop hypothetically warns, he would likely agree that it is an affront on autonomy.

A Framework for Assessing Manipulative Advertising Techniques In addition to being an affront on autonomy, neuromarketing likely is a manipulative influence on the consumer. Shlomo Sher presents a comprehensive framework to assess whether an advertisement is manipulative or not. The types of persuasive advertising techniques rest on a spectrum, with manipulation lying somewhere

Fishner 23 between rational persuasion and coercion.28 Manipulation does not limit the individual to one plausible choice as coercion does (such as the situation of a gun-wielding thief giving the option of your money or your life), nor is manipulation as open-ended as rational persuasion through the transfer of relevant information (such as nutritional information). Rather, manipulative techniques alter the normal decision-making process to the extent that it limits ones choices.

An act is manipulative if it is intended to motivate by undermining what the marketers believes is the audiences normal decision-making process either by deception or by playing on a vulnerability the marketer believes exists in his/her audiences normal decision-making process.29

The chart below graphically represents Shers framework to determine whether or not an advertisement is manipulative.

28

Greenspan, Patricia. (2003). The Problem with Manipulation. American Philosophical Quarterly. 40 (2):155-64. 29 Sher, Shlomo. (2011) A Framework for Assessing Immorally Manipulative Marketing Tactics. Journal of Business Ethics (2011) 102:97118

Fishner 24

Manipulative intent is different than deceptive intent, which Sher describes as a marketing tactic is deceptive if it intends to bring about consumer misconception by providing what the marketer believes is false evidence, omitting key evidence, or misrepresenting what the evidence means.30 Neuromarketing techniques are not intended to omit nor misrepresent information, but rather avoid conscious reasoning altogether. For example, misrepresenting the nutritional information in a beverage is both deceptive and manipulative, as it distorts information in order to undermine the consumers normal consciously reasoned decision-making process. In deliberating one beverage over another, valuing nutritional information (along with taste, quantity, etc) is mostly a conscious endeavor. However, valuing the label of the bottle, as with the California Olive Ranch example, is largely a subconscious process, as it is assumed that most consumers do not buy food products for their labeling. (Of course there are exceptions to this rule, such a wine bottle labels). But for the most part, consumers
30

Sher (2011)

Fishner 25 consciously buy food and drink products for their taste and nutritional content. Thus, returning to Shers framework, subconscious advertising techniques are not deceptive as they do not omit or misconstrue information. The chart then progresses to the question is the tactic trying to play on a vulnerability the marketer believes exists in his/her audiences normal decision-making process? The answer to this question is likely yes, as the subconscious advertising technique plays on the vulnerability of the consumers inability to reflect upon subconscious sources of first-order desires, as shown by the section on consumer dumbfounding. A meaningful argument defending neuromarketing is that other products using ordinary creative design methods similarly play on the vulnerability of subconscious responses. This is certainly true, but the campaigns are not deliberately created to target subconscious decision factors that consumers are unaware of. The neuromarketing campaigns are manipulative not because they elicit subconscious effects, but because they deliberately intend to play on the vulnerability of the consumers limited ability to reflect subconscious sources of first-order desires.

What is at issueis not whether an actual vulnerability is being acted upon, but rather whether the marketer is attempting to use whatever s/he perceives as a vulnerability to undercut her/his audiences ability to make good decisions.31

Thus, it is not necessary for the neuromarketing techniques to be effective in terms of increased sales in order for them to be considered manipulative. Rather, since neuromarketing techniques deliberately target the subconscious sources of first-order
31

Sher (2011)

Fishner 26 desires, and hence undermine the normal decision-making process of the consumer; they are manipulative in Shers framework.

Part II: Neuromarketing and Market Competitiveness This part builds on the conclusions that neuromarketing (1) limits autonomy and (2) is a manipulative practice, in order to consider whether or not a free market economist such as Milton Friedman would permit the use of neuromarketing and the existence of neuromarketing firms such as NeuroFocus.

Liberal Criterion for Economic Freedom This thesis is not trying to argue what the necessary conditions for market competitiveness are, but rather identify the widely-agreed upon conditions by American courts and policy makers. To identify these conditions, I make three assumptions: (1) the competitive marketplace is the most efficient system for allocating resources, (2) capitalism is the premier form of the competitive marketplace, and (3) the United States has a capitalist economy. Since the United States is a capitalist economy, I will be arguing for ways to increase efficiency within that system, rather than change the system itself. Furthermore, this will be an analysis of microeconomic market competitiveness, for example the competitiveness in the pharmaceutical industry. It will not compare the competitiveness of the United States economy versus the Indian one. The free market economist hopes to limit government intervention in the marketplace unless it is absolutely necessary. Capitalism and Freedom provides the

Fishner 27 modern framework for how a government should preside over a market economy populated by free individuals. By virtue of the nature of the free market, Friedman explains that democracy is the only possible government structure to govern over a capitalist marketplace. This government should have a limited influence over both corporations and individuals participating in the free marketplace.

First, the scope of the government must be limited. Its major function must be to protect our freedom both from the enemies outside our games and from our fellow citizens: to preserve law and order, to enforce private contracts, to foster competitive markets. Beyond this major function, government may enable us at times to accomplish jointly what we would find it more difficult or expensive to accomplish severally.32

Government is responsible for protecting individual freedoms and fostering competition in the market. When an individual or firm infringes upon those tenets, government is responsible for returning it to the status quo. However, it must be made clear that, according to Friedman, government should never attempt to accomplish a goal that the free market can achieve itself. This is a blurry line, but one this thesis will attempt to clarify. Although one could possibly arrive at the same destination through government intervention and free market forces, the means of the free market preserves individual liberties and often provide a superior long-term solution.
32

Friedman, Milton. Capitalism and Freedom. [Chicago]: University of Chicago, 1962. Print.

Fishner 28 Fundamentally, there are only two ways of coordinating the economic activities of millions. One is central direction involving the use of coercionthe technique of the army and of the modern totalitarian state. The other is voluntary cooperation of individualsthe technique of the market place. The possibility of coordination through voluntary cooperation rests on the elementaryyet frequently denied proposition that both parties to an economic transaction benefit from it, provided the transaction is bilaterally voluntary and informed. Exchange can therefore bring about coordination without coercion. A working model of a society is a free private enterprise exchange economywhat we have been calling competitive capitalism.33

Thus, the free market and government orchestration create the same end result of an exchange of goods, but the free market preserves liberty by allowing the action to be voluntary. Voluntary exchange is a necessary condition for competitive markets, thus when voluntary exchange is obscured, the overarching system of competitive capitalism is similarly made less effective in coordinating the economic activities of millions. If neuromarketing obscures voluntary exchange, it is an affront on market competitiveness.

So long as effective freedom of exchange is maintained, the central feature of the market organization of economic activity is that it prevents one person from interfering with another in respect to most of his activities. The consumer is protected from coercion by the seller because of the presence of other sellers with whom he can deal. The seller is protected from coercion by the consumer because
33

Friedman (1962)

Fishner 29 of other consumers to whom he can sell. The employee is protected from coercion by the employer because of other employers for whom he can work, and so on. And the market does this impersonally and without centralized authority.

So the question is, does neuromarketing interfere with the consumers activities, and hence voluntary exchange? It interferes with the consumers activities in its capacity to limit autonomy and manipulate the consumer. But, it is important to note that it is not the coercion that Friedman mentions above, as neuromarketing does not create one real choice for the consumer. Friedman would further argue that neuromarketing does not limit the choices available to the consumer, as the consumer is protected by the presence of other sellers from which he can buy. If a seller is manipulative, and the consumer becomes aware of the manipulation, the consumer can then punish the seller by buying from a different source. Thus, a seller is disincentivized to manipulate its customers because it would lose its customers to other sellers. Friedman would thus argue that, although neuromarketing interferes with the consumers decision-making process, it does not limit the consumers ability of voluntary exchange and the opportunity to buy from alternative sellers. However, if the consumer is unaware of the manipulative techniques of neuromarketing, can he punish that seller by buying from a different source? If the consumer consciously knew of neuromarketings manipulative abilities, then certainly he could buy products from an alternative seller.34 But, since he is unaware of neuromarketings manipulative ability, he is not able to punish the manipulative seller by
34

Campbell, M. C. (1991). Perceived manipulative intent: A potential risk to advertising. Stanford University). ProQuest Dissertations and Theses,

Fishner 30 purchasing her product from a competitor. Thus, although there are other sellers present in the market, and the consumer is aware of those alternative sources, he is not motivated to transition from his current choice because he is unaware that his current seller is manipulating him. This inability to punish a manipulative seller may infringe upon Friedmans criterion for voluntary exchange.

In the complex enterprise and money-exchange economy, cooperation is strictly individual and voluntary provided: (a) that enterprises are private, so that the ultimate contracting parties are individuals and (b) that individuals are free to enter or not to enter into any particular exchange, so that every transaction in strictly voluntary.35

Neuromarketing poses problems for provision (b), specifically that individuals are free not to enter into any particular exchange. As shown above, the consumer is not free to exit a relationship with a manipulative seller because he is unaware that the seller is manipulative. A philosopher would argue that the consumer is still free to exit the transaction. But, as Milton Friedman defends economic freedom as the ability to choose alternative products, the consumers economic freedom is limited in that sense. Neuromarketing is not coercive in that it gives the consumer only one choice, but manipulative in that it limits the consumers ability to choose alternatives. When this condition is limited, it is an affront on voluntary exchange; and when the condition of voluntary exchange is limited, the free market as a whole is made less competitive. Thus
35

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Fishner 31 as neuromarketing limits a consumer ability to choose alternatives, it furthermore makes the market as a whole is less competitive. Friedman may agree that neuromarketing limits the consumers ability to choose alternatives, and even that it makes the market less competitive. But, would Milton Friedman support government intervention to protect the consumer from neuromarketing in order foster market competition? Or would he argue that the free market could accomplish the goal of protecting individuals from the manipulative techniques of neuromarketing, without the need for government intervention? The following section will address these questions. To focus the debate, this thesis uses NeuroFocus as a proxy for neuromarketing as a whole. If action (whether by government or free market forces) were taken against neuromarketing as a whole, NeuroFocus would likely cease to exist in its current business model, as it would no longer create a competitive advertising advantage for products. Thus, the following sections attempt to answer the question Would Milton Friedman support government intervention in the case of NeuroFocus?

Milton Friedman on Government Intervention in the case of NeuroFocus In Friedmans view, the only justifiable government interventions are for protecting individual freedoms and fostering market competition. On the issue of individual freedoms, it is possible that neuromarketing limits freedom in that it creates subconscious sources of first-order desires, which limits second-order desires ability to reflect on first-order desires. The first part of this thesis demonstrated that this is an affront on autonomy, but not necessarily freedom. I will not be arguing for government intervention on the grounds that neuromarketing attacks personal freedom. Rather, this

Fishner 32 section is concerned with the conclusion that neuromarketing hinders market competition by obscuring the necessary condition of voluntary exchange. Thus, this section solely discusses government intervention for the purpose of fostering market competition. In Friedmans writings the main justifications he gives for government intervention are in cases of monopoly, as a monopoly prevents the opportunity for alternatives.

Exchange is truly voluntary only when nearly equivalent alternatives exist. Monopoly implies the absence of alternatives and thereby inhibits effective freedom of exchange. In practice, monopoly frequently, if not generally, arises from government support or from collusive agreements among individuals.36

Similar to neuromarketing, monopolies obscure the necessary condition of voluntary exchange for market competition. However, Friedman notes that these monopolistic conditions often arise from prior government intervention. Thus, rather than contributing to long-term market competition, government intervention provides a short-term fix that leads to greater long-term problems. Take the example of the American railroad system in the late 19th and early 20th century. During his terms as President, Theodore Roosevelt placed heavy emphasis on the governments responsibility to ensure competition in the market by trust-busting monopolies. He attacked oil companies, banks, railroads, and multiple other industries that were thought to have monopolistic conditions. For the railroads, the 1906 Hepburn Act would be the most devastating. This regulation allowed the government to set
36

Friedman (1962)

Fishner 33 maximum shipping rates for the railroads, rather than allowing the market to naturally reach equilibrium.37 At the time, there was little opposition towards the Hepburn Act; it passed Congress with only three dissenting votes.38 Policy makers, politicians, and consumers largely viewed the railroads as a monopoly in the transportation market, and thus created a government-mandated maximum price to limit the monopolistic power of price-setting. (Price-setting is when only one company sets the market price for a good or service due to the absence of alternatives.) While railroads may have been powerful in the early 20th century, railroads are now struggling to compete in the 2012 United States transportation market. Now as automobile and air transit have grown in the transportation market, railroads require government subsidies to compete. The organization responsible for passenger transportation, Amtrak, is a government-owned company that received $1 billion in subsidies in 2006.39 While I am not attempting to claim that trust busting in 1906 directly caused the railroads to fail today, I would argue that it limited the railroads ability to compete in the passenger transportation market of today. The American passenger railroad system pales in comparison to the high-speed passenger rail networks of Japan and Europe, which are profitable.40 Hypothetically, if the railroads were allowed to generate larger profits in the early 20th century, they would have been able to invest in advanced research & development, allowing them to develop high-speed rail networks comparable to Europe and Japan. However, as government intervention limited the
37 38

Hepburn Act, 59th Congress, Sess. 1, ch. 3591, 34 Stat. 584, enacted 1906-06-29. Morris, Edmund (2002). Theodore Rex. Modern Library. p. 446. ISBN 978-0-8129-6600-8. 39 OToole, Randal (2008. Rails Wont Save America. CATO Institute. http://www.cato.org/pubs/bp/bp107.pdf 40 Other High-Speed Rail Systems. California High-Speed Rail Authority. http://www.cahighspeedrail.ca.gov/other_systems.aspx

Fishner 34 ability of the railroads to generate a profit, it limited their ability to invest in the longterm growth of the company. Policy makers had no idea that the vast adoption of the automobile was right around the corner, nor predicted an expansive air transportation network. This is the crux of the issue with government intervention, we as individuals simply do not know what the future holds in terms of innovations. The automobile and airplane industries would have defeated the monopolistic railroads, but without the need for government intervention. Friedman wisely integrated a time-proof aspect to liberalism by acknowledging the fluidity of economic innovation. His argument essentially states that the free market will adjust to the demands of consumers over time. Government should not intervene in the short-term, as the market will adapt in the long term to combat anti-competitive institutions.

If society were static so that the conditions which give rise to a technical monopoly were sure to remain, I would have little confidence in this solution. In a rapidly changing society, however, the conditions making for technical monopoly frequently change and I suspect that both public regulation and public monopoly are likely to be less responsive to such changes in conditions, to be less readily capable of elimination, than private monopoly.

By allowing the monopolistic conditions of the railroads to persist, it puts greater pressure on the need for innovation, such as the automobile. Intelligent entrepreneurs acknowledge inefficiencies in the market and innovate in order to alleviate them. In the case of the railroads, it should be the responsibility of entrepreneurs to bust the

Fishner 35 monopoly, not the government. Thus, liberal economists such as Milton Friedman acknowledge that there are anti-competitive conditions in the market, but it is not necessarily the governments responsibility to fix them. In answering whether or not Milton Friedman would support government intervention in the case of NeuroFocus, he would likely be opposed to it. Although he may acknowledge that NeuroFocus is an affront on market competition, it is up to entrepreneurial men and women to restore competition.

When I started in this business, as a believer in competition, I was a great supporter of antitrust laws; I thought enforcing them was one of the few desirable things that the government could do to promote more competition. But as I watched what actually happened, I saw that, instead of promoting competition, antitrust laws tended to do exactly the opposite, because they tended, like so many government activities, to be taken over by the people they were supposed to regulate and control. And so over time I have gradually come to the conclusion that antitrust laws do far more harm than good and that we would be better off if we didnt have them at all, if we could get rid of them.41

Since government intervention is not necessarily justified, we must indentify market solutions to reduce the effectiveness of neuromarketings subconscious advertising techniques.

41

Friedman, Milton (1999). The Business Communitys Suicidal Impulse. CATO Policy Report. March/April 1999. Vol 21, No 2.

Fishner 36 FTC Precedent on Subliminal Messaging and Regulating Manipulative Advertising Techniques Although this thesis arrives at the conclusion that government regulation is not justified in the case of neuromarketing, I want to give a brief overview of what potential regulations would look like. The closest example to regulation on manipulative advertising techniques is the case of subliminal messaging in the 1970s. The FTC defines subliminal messaging as any technique whereby an attempt is made to convey information to the viewer by transmitting messages below the threshold level of normal awareness.42 This thesis provides evidence that neuromarketing can be similarly categorized, as it creates subconscious sources of first-order desires that the consumer is unaware of. Meaning, sources below the threshold of normal awareness. Based on the above definition of subliminal messaging, the FTC ruling follows

We believe that use of subliminal perception is inconsistent with the obligations of a licensee, and therefore we take this occasion to make clear that broadcasts employing such techniques are contrary to the public interest. Whether effective or not, such broadcasts clearly are intended to be deceptive.43

Similar to research on neuromarketing, there is no conclusive evidence on the effectiveness of subliminal messaging. However, it is not the effectiveness that is being regulated, but rather the intentional use of subconscious techniques. Again, I want to
42

Public Notice Concerning the Broadcast of Information By Means of Subliminal Perception Techniques, 44 FCC 2d 1016, 1017 (1974) 43 Public Notice Concerning the Broadcast of Information By Means of Subliminal Perception Techniques, 44 FCC 2d 1016, 1017 (1974)

Fishner 37 clarify that this thesis does not suggest government intervention; I only want to give an example of what regulation would look like. Market solutions provide long-term competitive measures to reduce the appeal of neuromarketing, and potential solutions are outlined below.

Market Solutions to Reduce the Effectiveness of Neuromarketing This section is intended to begin the conversation on possible market solutions, but is by no means the ultimate solution. I hope that readers of this work similarly offer suggestions and build upon my possible solutions. Neuromarketing is potentially effective because it creates subconscious sources of first-order desires. Thus, market solutions should attempt to (1) allow the consumer to become conscious of the subconscious sources and/or (2) give consumers conscious resources that greatly outweigh the influences of the subconscious neuromarketing techniques. I will start with recommendations for option 2. As consumers become increasingly interconnected through the Internet, they are able to leverage a vast wealth of data on products. These resources allow consumers to make decisions based largely upon conscious desires, rather than underpinnings of which they are unaware. Crowdsourcing allows for problem-solving to be distributed between a multitude of people, or crowd. In the case of product reviews, companies exist that aggregate reviews and resell them to potential product buyers.44 Consumer Reports is the most famous example.45 (Consumer Reports is actually a non-profit organization filling a valuable user need. A successful for-profit company could certainly shake up this
44

Howe, Jeff. "The Rise of Crowdsourcing." Wired.com. 2006. Web. 22 Mar. 2012. <http://www.wired.com/wired/archive/14.06/crowds.html>. 45 Consumer Reports: About Us http://www.consumerreports.org/cro/aboutus/index.htm

Fishner 38 market.) This cost of this technology has vastly declined with the Internet, as users are able to quickly post and share user reviews. The business model would be a database of information directly pertaining to the quality and price of a product, without confounding factors such as subconscious advertising techniques. Recommendations for market solutions that allow consumers to become conscious of neuromarketings techniques hinge on increases in the awareness of both the marketer and the consumer on the effect of subconscious advertising techniques on autonomy and market competitiveness. Just as the consumer is unaware of the autonomylimiting nature of subconscious advertising, the marketer may be as well. By providing the marketer with this information, it is hoped that she too is reflective in her use of subconscious advertising techniques. Furthermore, it is hoped that neuromarketing firms become more open about their techniques. At this point, much of the consumer testing/advertising strategies/formulas/algorithms are black boxes, where it is difficult to assess how deliberately manipulative the techniques are. If consumers demand transparency, the neuromarketing firms may be forced to reveal their practices. Again, these recommendations are only the starting point for market solutions. They are a call to action, a call that I will act upon.

Conclusion While this thesis demonstrates that neuromarketing techniques are manipulative, limit consumer autonomy, and reduce market competition, I do not wish to claim that neuromarketers deliberately induce these results. Yes, they intentionally target subconscious decision-making. But I am hopeful that they are unaware of the effects of

Fishner 39 neuromarketing on autonomy and market competition. I hope that this thesis brings awareness, and inspires action.

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Fishner 43 Tversky, A., and D. Kahneman. "Judgment under Uncertainty: Heuristics and Biases."Science 185.4157 (1974): 1124-131. Print. Wilcox, Brian. "SUMMARY OF THE FINDINGS AND CONCLUSIONS: Report of the Task Force on Advertising and Children." 18 Feb. 2004. Web. 2012. 15 USC 45 - Unfair Methods of Competition Unlawful; Prevention by Commission." Web. 15 Mar. 2012. http://www.law.cornell.edu/uscode/text/15/45 Notes:
i

Julie and Mark, who are brother and sister are traveling together in France. They are both on summer vacation from college. One night they are staying alone in a cabin near the beach. They decide that it would be interesting and fun if they tried making love. At very least it would be a new experience for each of them. Julie was already taking birth control pills, but Mark uses a condom too, just to be safe. They both enjoy it, but they decide not to do it again. They keep that night as a special secret between them, which makes them feel even closer to each other. So what do you think about this? Was it wrong for them to have sex? (Haidt 2000)