Political Consumers: Who They Are and How They Impact Firms

Abstract

Political consumerism appears to have become the most common form of political participation outside of voting in North America and Western Europe. Nearly half of U.S. adults report using their purchasing power to punish or reward firm behavior. However, studies that actually observe political consumerism are rare and tend to focus on narrow cases. Does political consumerism represent a significant political risk to firms?In this dissertation, I examine three foundational questions about the political risk implications of environment-related political consumerism by leveraging 13 years of barcode-level data on grocery purchases by approximately 60,000 U.S. households. First, I estimate how environment-related reputational risk incidents affect aggregate household purchasing behavior and whether the implicated firms adjust their pricing strategies to mitigate the short-term revenue impact of risk exposure. Next, I study who the political consumers are by analyzing which political and demographic characteristics explain participation. Finally, to explain why households participate, I analyze how key risk incident attributes affect observed political consumerism.I find that environment-related risk incidents modestly reduce firm revenue in the short run and that firms choose not to leverage three plausible pricing strategies that could mitigate their revenue loss. Differences in household participation primarily reflect differences in issue preferences, but surveys appear to underestimate the impact of household income. Partisan preferences have a substantively large and plausibly causal effect on participation. Incidents related to global environmental issues lead to more political consumerism than local pollution incidents, but participants may be more sensitive to local pollution incidents that occur in their home market.