In this short article, Israel Kirzner makes a distinction between information and knowledge, or between “information-knowledge” and “action-knowledge,” or between pure data of which no practical use is made and entrepreneurship. He applies the distinction to several real-life instances and concludes with an interesting comment on advertising: “The economics of information, for example, in the economics of advertising, almost invariably assumes that once information has been deployed in a process of learning to create “knowledge,” utilization of that knowledge follows inexorably. So that much of the significance of advertising activity, which goes so far beyond the mere provision of information, is completely lost sight of. The truth surely is that to inspire the consumer to act in a manner which correctly mirrors his preferences and resources calls for more than the provision of information. It calls for him to be alert to that information and to its significance. In evoking this alertness, advertising plays an important economic role. But this role is invisible to theorists who treat information-knowledge as identical with action-knowledge.”
Kirzner on Knowledge vs. Information
