The Role of Repugnance in Markets: How the Jared Fogle Scandal Affected Patronage of Subway / John Cawley, Julia Eddelbuettel, Scott Cunningham, Matthew D. Eisenberg, Alan D. Mathios, Rosemary J. Avery.

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Cawley, John

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TextSeries: Working Paper Series (National Bureau of Economic Research) ; no. w31782.Publication details: Cambridge, Mass. National Bureau of Economic Research 2023.Description: 1 online resource: illustrations (black and white)Subject(s):

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Abstract: Economics has long studied how consumers respond to the disclosure of information about firms. We study a case in which the disclosed information is unrelated to the product or firm leadership, but which could still potentially affect consumer patronage through the mechanism of repugnance, as described in Roth (2007). The information in this case concerns the arrest of Jared Fogle, the advertising pitchman for the Subway sandwich franchise, who was arrested in 2015 on charges of sex with a minor and child pornography. We study how the disclosure of this information, which was widely covered in the media, affected patronage of Subway. We estimate synthetic control models using data from a large nationwide survey of consumers regarding the restaurants they patronize. Despite the close and long-standing association of Jared Fogle with Subway, and heavy publicity of his crimes, we consistently fail to detect any effect of the Jared Fogle scandal on the probability of visiting a Subway restaurant. These results contrast with past studies of negative information disclosure, which tend to find negative impacts on sales, revenue, or stock price of the relevant companies. The absence of an effect in this case suggests that repugnance did not drive demand, and that consumers largely separated the offenses of a symbol of the firm from the products of the firm.

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Item type	Home library	Collection	Call number	Status	Date due	Barcode	Item holds
Working Paper	Biblioteca Digital	Colección NBER	nber w31782 (Browse shelf(Opens below))	Not For Loan

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October 2023.

Economics has long studied how consumers respond to the disclosure of information about firms. We study a case in which the disclosed information is unrelated to the product or firm leadership, but which could still potentially affect consumer patronage through the mechanism of repugnance, as described in Roth (2007). The information in this case concerns the arrest of Jared Fogle, the advertising pitchman for the Subway sandwich franchise, who was arrested in 2015 on charges of sex with a minor and child pornography. We study how the disclosure of this information, which was widely covered in the media, affected patronage of Subway. We estimate synthetic control models using data from a large nationwide survey of consumers regarding the restaurants they patronize. Despite the close and long-standing association of Jared Fogle with Subway, and heavy publicity of his crimes, we consistently fail to detect any effect of the Jared Fogle scandal on the probability of visiting a Subway restaurant. These results contrast with past studies of negative information disclosure, which tend to find negative impacts on sales, revenue, or stock price of the relevant companies. The absence of an effect in this case suggests that repugnance did not drive demand, and that consumers largely separated the offenses of a symbol of the firm from the products of the firm.