Branded children

McDonald's reportedly spends more than $1 billion per year on advertising in the United States, and a new study suggests that the company is getting its money's worth.

The study, conducted by Stanford University researchers, found that when children between ages 3 and 5 were offered identical foods in a McDonald's wrapper and a plain wrapper, they consistently said that the food in the McDonald's wrapper tasted better.

Researchers offered the food to 63 children from six Head Start programs in San Mateo County, Calif., giving them chicken nuggets, hamburgers, and french fries from McDonald's and baby carrots and milk from a grocery store. On four of five items a large percentage of the children said the food items tasted better when they came in a McDonald's wrapper. On the fifth, children preferred the hamburger in a McDonald's wrapper but (oddly, for the fast-food chain's signature menu item) only by a plurality.

The results, which were published this month in the Archives of Pediatrics & Adolescent Medicine, gave ammunition to health activists who want to restrict advertising aimed at children. "Advertisers have tried to do exactly what this study is talking about-to brand younger and younger children, to instill in them an almost obsessional desire for a particular brand-name product," Victor Strasburger, author of an American Academy of Pediatrics policy against such marketing, told the Associated Press.

For its part, McDonald's says it puts fruit and lower-calorie food in the Happy Meal that it promotes to young children. The fast-food giant was among 11 companies last month to announce voluntary restrictions on marketing to children.

But as that debate raged, fewer commentators mentioned another implication of the study: If McDonald's is able to "brand" children, it's because many parents are essentially roping and throwing them first.

Study leader Thomas Robinson said children who went to McDonald's regularly and had numerous TV sets in their homes were most likely to prefer McDonald's-wrapped food. The children's homes had an average of 2.4 television sets, and more than half of the children in the study (ages 3-5, remember) had TV sets in their bedrooms. About one-third of the children ate at McDonald's at least once per week.

Marketers, it turns out, are not all-powerful agents. To the extent that this study reveals a problem, it is one parents can solve.

Balance Sheet

LABOR: Worker productivity, a key contributor to higher living standards, rose at an annual rate of 1.8 percent during the second quarter, according to a report last week from the Labor Department. That was less than many economists had expected, but it was a large jump from the 0.7 percent increase for the first quarter. The overall GDP increased at an annual rate of 3.4 percent from April through June, up from 0.6 percent during the first quarter.

DEBT: Americans may have produced more at work, but they also borrowed more on their credit cards. The Federal Reserve reported last week that revolving credit increased at an annual rate of 8.4 percent in June. Total U.S. credit card debt stood at nearly $2.5 trillion.

HOUSING: Another week, another subprime mortgage lender bites the dust. American Home Mortgage Investment Corp. filed for bankruptcy protection on Aug. 6, listing debts of $19.3 billion. The move came as other major mortgage lenders, such as Wells Fargo & Co. and Wachovia Corp., raised their interest rates and tightened standards for all borrowers. The Bloomberg news service reported that $11.2 billion in mortgage bonds not backed by Fannie Mae, Freddie Mac, or Ginnie Mae were sold in July, compared to $41.6 billion in June.