234. Do Boycotts Work?

The Montgomery Bus Boycott, the South African divestment campaign, Chick-fil-A! Almost anyone can launch a boycott, and the media loves to cover them. But do boycotts actually produce the change they're fighting for?

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:01Stephen J. Dubner?

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• 1:28Stephen J. Dubner?

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• 1:56Stephen J. Dubner?

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• 2:47Stephen J. Dubner?

  Just over 60 years ago, on December 1, 1955, an African-American woman named Rosa Parks refused to give up her seat to a white passenger on a city bus in Montgomery, Alabama.

• 2:58Speaker 01

  The driver said that if I refused to leave the seat, he would have to call the police, and I told him, just call the police.

• 3:09Stephen J. Dubner?

  Parks was arrested for violating segregation laws. This news soon reached a little-known Baptist minister named Martin Luther King Jr.

• 3:17Speaker 02

  And we had a meeting at my church the next night and discussed ways of dealing with this and protesting such a grave injustice. At that time, we decided that we would have a bus boycott beginning on Monday, December 5.

• 3:33Stephen J. Dubner?

  King became the lead organizer of the Montgomery Bus Boycott, the first major organized action against racial segregation in the United States.

• 3:43Speaker 03

  At present, we are in the midst of a protest, Negro citizens of Montgomery, representing some 44% of the population. 90% at least of the regular Negro bus passengers are staying off the buses, and we plan to continue until something is done.

• 4:01Stephen J. Dubner?

  King and his allies set up car pools and other ways for people to get around.

• 4:05Speaker 02

  A few days after we started, the bus officials wanted to end segregation almost immediately because they were losing so much money a day. But the city commission held out, contending that on the basis of the city ordinances and on the basis of state laws, they could not and they would not integrate the buses.

• 4:28Stephen J. Dubner?

  The Montgomery Bus Boycott lasted for 381 days.

• 4:32Speaker 02

  Finally, the Supreme Court's decision came declaring bus segregation unconstitutional. And this brought about an end to segregation, and we went back to the buses on an integrated basis.

• 4:47Stephen J. Dubner?

  Let's put aside for a moment the impact, the political, social, and human impact of the integration victory. Let's look at this from a different angle. What is the moral of the Montgomery Bus Boycott? It would seem to be that boycotts work, right? As the story is told in our history books, a brave woman named Rosa Parks took a stand by keeping her seat, and her arrest led to a boycott, which in turn led to history being made. Today on Freakonomics Radio, we ask a simple question: Do boycotts work? Let me warn you right now: The answer is not as clear-cut as you might think.

• 5:30Speaker 04

  If the media coverage doesn't go away, then it does add up, and it can be a pretty sizable effect on the company's stock price.

• 5:37Speaker 05

  There are a variety of empirical papers that point out that the economic impact of boycotts is limited.

• 5:43Speaker 06

  Boycotts almost surely will never work.

• 6:03Speaker 07

  From WNYC Studios, this is Freakonomics Radio, the podcast that explores the hidden side of everything. Here's your host, Stephen Dubner.

• 6:17Stephen J. Dubner?

  It would certainly seem as if the Montgomery bus boycott accomplished its goal, or did it?

• 6:23Speaker 05

  Being able to identify the actual causal impact of the Montgomery boycott is very difficult, probably impossible.

• 6:33Stephen J. Dubner?

  That's the political scientist Daniel.

• 6:35Speaker 05

  Deere Meyer. Yeah, like a deer, you know, the thing with the antlers and then Meyer.

• 6:40Stephen J. Dubner?

  He's a pretty important fellow.

• 6:41Speaker 05

  I'm the dean of the Harris School of Public Policy at the University of Chicago.

• 6:45Stephen J. Dubner?

  Now, what does Deere Meyer mean when he says it's impossible to?

• 6:49Speaker 05

  Identify the actual causal impact of the Montgomery boycott.

• 6:53Stephen J. Dubner?

  Well, as is usually the case, the world is a bit more complex than the headlines would have us believe. Let's go back to Rosa Parks on the bus in December of 1955. Parks wasn't some random bus passenger. Contrary to the folkloric accounts, Mrs. Parks was not too tired to move from her seat. I'm reading now from the website of the NAACP, the National Association for the Advancement of Colored People, which despite its antiquated name is still, and especially was then, a civil rights powerhouse. Some more from that website. Rather, she had been a knowledgeable NAACP stalwart for many years. Rosa Parks, at the time of her arrest, worked as a seamstress but also as a secretary to the president

• 7:38Stephen J. Dubner?

  of the NAACP's Montgomery chapter. And she was hardly the first African American arrested in Montgomery for not giving up their bus seat. This practice was, in fact, a strategy that activists have been cultivating. But when Rosa Parks was arrested, she was considered the right person to move this strategy forward. The NAACP provided legal defense to her and Dr. Martin Luther King Jr., and it was the NAACP that helped bring the legal case that ultimately made its way to the Supreme Court. Although we should note that that case did not actually include Rosa Parks herself.

• 8:15Speaker 05

  But there are some people that argue that, at the end of the day, it was really the legal strategy of the NAACP that really kind of, you know, was the decisive component. And it's difficult to disentangle that.

• 8:25Stephen J. Dubner?

  Difficult to disentangle because why? Wasn't it the bus boycott that made things happen?

• 8:30Speaker 05

  You saw lots of African Americans who stopped riding the bus.

• 8:33Stephen J. Dubner?

  That's Braden King, no relation to Martin Luther King Jr. He is a management professor at Northwestern.

• 8:40Speaker 04

  And there's clear evidence that this was an economic cost to the city of Montgomery.

• 8:45Stephen J. Dubner?

  But remember, as we heard Martin Luther King Jr. explain earlier, the bus company was ready to cave in early. It was the politicians who held out. The holdout was followed by more and more press coverage, which was followed by the Supreme Court case, which was followed by desegregation of the Montgomery buses. So how much credit should be given to the boycott?

• 9:08Speaker 05

  I think most scholars that have looked at this particular case would argue that the boycott became a symbolic event that triggered an entire social movement.

• 9:16Stephen J. Dubner?

  Indeed, both Daniel Deere Meyer and Braden King, as well as most other scholars who've studied the Montgomery bus boycott, consider it a model of the successful boycott. Ditto the grape boycott of the 1960s. This included a strike by farm workers and a consumer boycott of grapes that had been picked by non-union workers.

• 9:38Speaker 04

  They're exemplary because they both kind of represented a movement at its prime. I think, though, you know, even though those are sort of our historical examples of what a boycott looks like, they're not actually that representative. So most boycotts don't function like that.

• 9:52Stephen J. Dubner?

  The bus and grape boycotts were not representative because why? For starters, these were boycotts that fed into an established movement with many existing layers of activism and support. And maybe most important, these were boycotts with good historical timing. Change was happening, and the boycotts reflected the appetite for that change. So did the boycotts cause the change? As Daniel Deere Meyer says,

• 10:19Speaker 05

  It's difficult to disentangle that.

• 10:24Speaker 05

  There's a whole bunch of different potential methodological problems that show up in any type of econometric analysis. One thing that makes this complicated, for example, is that advocacy groups choose their targets strategically. It's not that boycotts are randomly assigned to companies as they would be in a randomized trial in another policy area. So that makes it difficult to really be able to identify what the specific economic consequence or policy consequence of a boycott is.

• 10:52Stephen J. Dubner?

  Fair enough, but let's at least see what we can learn. As we've already noted, it can be really hard to measure the impact of something like a boycott. Sometimes it's even hard to figure out the precise goal of the boycotters. Are they trying to damage the finances of a company or an institution? Or maybe their reputation? The filmmaker Quentin Tarantino recently found himself targeted after he called some policemen murderers.

• 11:17Speaker 08

  That comment caught the attention of the New York City Police Union, which said in a statement, "It's no surprise that someone who makes a living glorifying crime and violence is a cop hater too. It's time for a boycott of Quentin Tarantino's film."

• 11:29Stephen J. Dubner?

  Or are some boycotters just trying to make noise? Get some attention for themselves? You probably recognize this voice.

• 11:35Speaker 09

  Oreos. I love Oreos. I'll never eat them again. Yeah. Okay? I'll never eat them again. No, Nabisco closes a plant, they just announced a couple of days ago, in Chicago, and they're moving the plant to Mexico.

• 11:52Stephen J. Dubner?

  Or is the boycott more of a moral statement, hoping to build awareness around a problem or maybe aiming for reform rather than damage? Then there's the fact that boycotts are closely related to and may become intertwined with protests or worker strikes, even embargoes. So, as you can see, there are a lot of variables. Let's start with a basic question. Why do boycotts usually happen? Here again is Braden King.

• 12:21Speaker 04

  When I was thinking about this, I, of course, had in mind the civil rights movement and the great workers boycott. And so I thought, well, we're going to have a lot of labor issues. We're going to have a lot of civil rights or race-related issues. And those two were relatively high. They're both maybe like in the top five number of issues that showed up in boycotts. But I was surprised to find that a lot of relatively conservative issues get represented in boycotts as well. So the top category, I sort of lumped them all together in one category, were religiously motivated boycotts. This would be groups that were boycotting Disney.

• 12:57Speaker 10

  Disney signed an occultic rock band to a Disney record label. Disney extended insurance benefits to the live-in partners of homosexual employees.

• 13:06Speaker 04

  They felt that Disney was too liberal in its employment policies, too supportive of LGBT employees. And so there was actually a group in the 90s that boycotted Disney because of that.

• 13:17Speaker 10

  The Assemblies of God announced today they were boycotting the Walt Disney Company.

• 13:21Speaker 04

  If you look at boycotts even today, it's still a tactic that's often used by religiously conservative groups.

• 13:27Stephen J. Dubner?

  Religious conservatives are also on the receiving end of boycotts, like the Chick-fil-A boycott in 2012.

• 13:33Speaker 11

  Gay rights supporters calling for boycotts after the president of the chicken restaurant chain said he opposed same-sex marriage.

• 13:43Speaker 05

  This is very common.

• 13:44Stephen J. Dubner?

  Daniel Deere Meyer again.

• 13:45Speaker 05

  A company makes a statement like that, there's outrage, then typically they apologize, there's some damage to the brand, and that is that. And then the question is, how well does the company handle that?

• 13:55Stephen J. Dubner?

  Chick-fil-A didn't quite apologize, but its CEO did say he regretted getting his company involved in the same-sex marriage debate. But the Chick-fil-A case was uncommon in other ways.

• 14:06Speaker 05

  What was interesting and different about the Chick-fil-A case was that there was a counter movement. So that in addition to the supporters of same-sex marriage that were calling for boycott of Chick-fil-A, there were both customers of Chick-fil-A, but also members of the public, politicians and so forth that supported Chick-fil-A.

• 14:27Speaker 08

  Supporters of the restaurant chain Chick-fil-A flocking to establishments all across the country for Appreciation Day, started by... That's right. Mike Huckabee had the great idea for it. Look, in America, the company's CEO has a right to an opinion.

• 14:42Speaker 05

  And that led then to the curious phenomenon of called a "bycot", which was that people were encouraged and participated in that particular counter movement to actually buy more chicken.

• 14:54Speaker 08

  The lines were out the door. Instead of losing business, Chick-fil-A had world record-breaking sales numbers.

• 15:01Stephen J. Dubner?

  So what was the net effect of the Chick-fil-A boycott, at least the financial net effect? Did boycott plus bycot equal less than or more than zero, as measured by whatever rough measures you want to use, quarterly revenues, share price, et cetera?

• 15:17Speaker 05

  I don't know of any kind of serious empirical work that looked at that.

• 15:22Stephen J. Dubner?

  One market research firm did claim that Chick-fil-A sales were up 2.2% for the quarter over the previous year, but that data just came from customer surveys and didn't control for long-term trends.

• 15:34Speaker 05

  There was some kind of casual looking at the numbers at this point. And from what we can tell, just from looking at that, is that the initial boycott didn't have much of an impact on Chick-fil-A. In some cases, there were even reports that sales went up and so forth, which is consistent with this movement, counter movement story.

• 15:51Stephen J. Dubner?

  Now, remember, the Chick-fil-A boycott was a bit of a special case. But let's ask another basic question. How well does this kind of boycott usually work?

• 16:00Speaker 06

  Boycotts almost surely will never work.

• 16:06Stephen J. Dubner?

  That's Evo Welsh.

• 16:07Speaker 06

  I'm a professor of economics and finance at the Anderson School at UCLA.

• 16:12Stephen J. Dubner?

  What makes Welsh so skeptical about boycotts? It goes back to apartheid South Africa.

• 16:34Speaker 06

  In the early 1980s and before then, there was a very large movement to divest all sorts of holdings and break all sorts of business and sports ties with South Africa. South Africa at the time had an apartheid regime that was institutionalized racism and about as abominable as it gets. So there were a lot of protests by students on campuses at Columbia, which is where I was at the time.

• 17:10Speaker 06

  There were sit-ins. There was a big movement to divest the pension holdings. Columbia has $39 million invested in South Africa. Banks actually had to have different requirements if they wanted to invest in South Africa. The tax laws were changed. There were all sorts of coordinated actions. They were not just in the United States, but all over the world. All designed to bring the South African regime to its knees, or at least have an influence on the perception of the public about South Africa.

• 17:40Stephen J. Dubner?

  It was generally assumed that the divestment campaign hurt the South African economy and hastened the end of apartheid.

• 17:48Speaker 12

  A symbol of black resistance to apartheid, and to many, he became a martyr. Tonight, he is a free man.

• 17:56Speaker 13

  As hundreds of people cheered, Nelson Mandela walked from the prison gates to freedom.

• 18:02Stephen J. Dubner?

  So was that the case? Was the boycott the lever, at least the economic lever, that helped pry South Africa out of apartheid? Roughly a decade after apartheid ended, Welsh and some colleagues tried to answer that question.

• 18:16Speaker 06

  If you had asked me before we had done this study, I would have said this is something that seems quite reasonable to try. If the Nazi regime was still around and we had a boycott of the Nazi regimes, I would be thrilled about this, just as I was thrilled about a boycott of the South African regime. But we wanted to see whether we could really measure the effect, how large it was. And unfortunately, when we started measuring it, we found that it had no impact whatsoever, which made us go back, scratch our heads, and start wondering, hmm, how would a boycott really work? And when we started to think about it, it became fairly clear fairly quickly that the boycott was never really fully enforced.

• 19:00Speaker 06

  That is, there were always easy ways to get around the boycotts. It was relatively easy to get gold and various other items out of South Africa, sell them within Africa, and then sell them further on. So in the end, there were just a lot of different ways to escape the boycott.

• 19:18Stephen J. Dubner?

  Not only did the South Africa divestment movement not seem to have played much of a role in ending apartheid, Welsh says it didn't even really hurt South African companies.

• 19:27Speaker 06

  So if you think about somebody who holds stock of a South African company, if they decide to sell their shares, it will take about a microsecond before there's another buyer to be found in the public markets. So it's very, very Very easy, the demand, supply of shares in the stock market is extremely elastic. And your decision to boycott, that is, to divest yourself of the shares, isn't going to make a difference. Now, if you could make it so that everybody in the world who wanted to hold South African stocks wouldn't have bought any shares from South Africa anymore, it would have made a difference. However, that wasn't the case. In reality, in real life, there were just too many people that were willing to hold

• 20:11Speaker 06

  the shares, and they immediately snapped up all the shares that people were willing to sell.

• 20:19Stephen J. Dubner?

  So despite a coordinated global effort by activists and institutions, Welsh and his colleagues found that South African firms were essentially unharmed by the boycott.

• 20:35Stephen J. Dubner?

  Here's another example. When the US invaded Iraq in 2003 to get rid of Saddam Hussein, France opposed the American-led war. How did Americans respond? Some people started calling French fries "freedom fries." Others suggested boycotts of things like Le Cirque, the famous French restaurant in New York. This provides a good example of how boycotts can be fantastically off-target.

• 20:59Speaker 14

  This restaurant, a great French restaurant, Le Cirque, it's owned by an Italian family. Do you want to hurt Italians? It is employing probably 90% people who are New Yorkers, who've come from everywhere in the world. Do we want to hurt them? Their suppliers are from everywhere. All we're doing, any kind of boycott, is simply shooting yourself in the foot.

• 21:23Stephen J. Dubner?

  There were also widespread calls for an American boycott of French wines. According to three economists who later analyzed the data, we show that there actually was no boycott effect.

• 21:38Stephen J. Dubner?

  So, why is there often no boycott effect? One reason may be that boycotts get a lot of attention. They're a good, easy, spicy story for journalists to cover, which gives the impression that the outrage is larger than it really is. Boris Johnson, the mayor of London, recently went on a trade mission to Israel where he was asked about a group of British academics urging a boycott of Israel over its Palestinian policies.

• 22:07Speaker 15

  The supporters of this so-called boycott are really just a bunch of corduroy jacketed academics who have no real standing in the matter.

• 22:17Stephen J. Dubner?

  But if most boycotts of this sort tend to be relatively ineffective, what about a more formal, more muscular version of a boycott, like a government embargo?

• 22:28Speaker 06

  So, the first place where boycotts or something like this has made a difference is probably Iran.

• 22:35Stephen J. Dubner?

  Evo Welsh again.

• 22:36Speaker 06

  We were very good in having international sanctions that Iran finds very hard to circumvent. That just simply means that Iran doesn't have easy substitutes for what's being embargoed upon them. They don't get the goods from Russia, they don't get it from Europe, they don't get it from the US. Similarly, there's an embargo on North Korea that seems to be fairly effective. Those are very different from boycotts. Boycotts are basically just part of the population, they're not really enforced, they're not really legal, they are very leaky, so those have never worked as far as I can tell. Embargoes may work, boycotts almost surely will never work.

• 23:23Stephen J. Dubner?

  There's one more reason a certain type of consumer boycott doesn't work. It's because they're sometimes just stupid. Every now and again, people who are upset over the price of gasoline will declare a no-gas day. They'll send around a chain email saying that if everyone refrained from buying gas for just one day-- here, I'll read from one of the emails-- "It would hit the entire industry with a net loss of over $4.6 billion. We can make a difference. If they don't get the message, we'll do it again and again." So, what's the problem with a boycott like this? Even if everyone in the US didn't buy gas for one day, today, let's say. They're still going to buy the gas tomorrow that they use today.

• 24:06Stephen J. Dubner?

  So if you have a no-driving-day boycott, that might accomplish something. But a no-buying-gas day wouldn't hurt the oil companies at all and would just make long lines for everyone at the gas pumps the next day.

• 24:23Stephen J. Dubner?

  Coming up on Freakonomics Radio, what's it like to work for a company that is the target of boycotts?

• 24:30Speaker 16

  I'm a scientist at Monsanto.

• 24:32Stephen J. Dubner?

  Also, our academic guests get into a little spat.

• 24:35Speaker 06

  Well, I would suggest that he start a hedge fund where he basically starts shorting those companies.

• 24:41Stephen J. Dubner?

  And if you ever miss an episode of Freakonomics Radio, you can find the archive at Freakonomics.com or on iTunes, where you can also subscribe to this podcast. On the other hand, you should feel free to boycott.

• 25:01Stephen J. Dubner?

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• 25:45Stephen J. Dubner?

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• 26:03Stephen J. Dubner?

  Freakonomics Radio is sponsored by Southern New Hampshire University. The best investments are the ones you make in yourself, and no one knows that better than Southern New Hampshire University. With more than 200 online degree programs, no set class times, and low online tuition, Southern New Hampshire University is built to fit your life today and set you up for success tomorrow. Education is an investment. Why not make it a smart one? Apply for free at SNHU.edu/freakonomics. Freakonomics Radio is sponsored by PNC Bank. Boring. Great word, bad rep. Yet, time and time again, here at Freakonomics, we find that when something culture-changing

• 26:45Stephen J. Dubner?

  happens, boring things like calculations and careful planning are usually behind it. Which begs the question, why not apply it to other aspects of life? Like banking, for example? Well, PNC Bank did since its inception, proving time and again that the best banking strategy isn't the exciting type, but the steady, reliable, definitely-not-YOLO type. PNC Bank: brilliantly boring since 1865. Brilliantly boring since 1865 is a registered mark of the PNC Financial Services Group, Inc.

• 27:16Stephen J. Dubner?

  PNC Bank, National Association, Member FDIC. Most of the evidence we've heard so far suggests that most boycotts don't really work. The political scientist Daniel Diermeyer.

• 27:38Speaker 05

  There are a variety of empirical papers that point out that the economic impact of boycotts, looking at various different companies, is limited. Not all of them.

• 27:48Stephen J. Dubner?

  But not all of them. So that leads to our next question. What are the characteristics of a boycott that does work? Braden King, the management professor at Northwestern, has written some of these empirical papers.

• 28:02Speaker 04

  And one thing we have noticed is that boycotts tend to be more effective, both in getting concessions and in generating negative stock price returns, when they tend to be targeted against a single firm.

• 28:15Stephen J. Dubner?

  So instead of a boycott of all French winemakers or all South African industries, a targeted boycott against one firm. But King also learned that even these boycotts can be weak because, well, because we are weak.

• 28:32Speaker 04

  There's some research that suggests that even consumers who are ideologically supportive of a boycott don't tend to follow through and support the boycott, either because they don't want to change their behavior, it's just hard to actually stop buying the product they used to buy in, or because they never bought the product in the first place.

• 28:52Stephen J. Dubner?

  Because of that?

• 28:53Speaker 04

  Because of that, because there didn't seem to be a lot of evidence that boycotts influence consumer behavior directly. I was more interested in the announcement of the boycott. So I ended up focusing on the announcement date as the beginning of the boycott and then sort of ignored whether it had any kind of subsequent effect on consumer behavior.

• 29:12Stephen J. Dubner?

  This led King to conclude that boycotts, while not very likely to hurt a company's short-term bottom line, can still hurt the company.

• 29:21Speaker 04

  Boycotts seem to be effective because they create some sort of reputational crisis for the firm that they have to deal with.

• 29:27Stephen J. Dubner?

  And what does it mean to have to deal with a boycott?

• 29:30Speaker 04

  If you look at all boycotts that have received some minimal national media attention, about 25% of those boycotts lead to some sort of public concession on the firm's part.

• 29:42Stephen J. Dubner?

  King found that targeted companies tend to make amends.

• 29:46Speaker 04

  If you look at companies that have been boycotted and compare them to other companies that are very similar to them in every way, except for they were not boycotted, that the boycotted companies tend to do a lot more pro-social behavior afterwards, or they make pro-social claims.

• 30:02Stephen J. Dubner?

  In 2001, for instance, Jesse Jackson's Rainbow Coalition took umbrage with a Toyota TV ad that showed an African-American man with a Toyota logo in a gold tooth. The Rainbow Coalition called for a boycott. Toyota apologized, pulled the ad, and, according to Braden King, pledged to increase their minority spending budget by 35%. In other cases, a boycotted firm may launch a new environmental program or make a big charitable donation, to which a cynic might say, "Well, isn't that just public relations?"

• 30:39Speaker 04

  I think the PR departments of a firm are often involved, but this is not necessarily coming completely from them. And one reason I think that is because you often see the CEOs involved in these pro-social campaigns after a boycott. And I was sort of puzzled by this. And I think that CEOs don't want to be associated with a company that has been sort of dragged through a reputational crisis.

• 31:04Stephen J. Dubner?

  Here, for instance, is BP CEO Tony Hayward apologizing for the Gulf of Mexico oil spill in 2010, which led to boycotts of BP filling stations.

• 31:13Speaker 17

  BP has taken full responsibility for cleaning up the spill in the Gulf. We've helped organize the largest environmental response in this country's history.

• 31:22Speaker 05

  There's no doubt in my mind that when managers or CEOs are confronted by a boycott, reputational damage is top concern for them.

• 31:31Stephen J. Dubner?

  Daniel Deere Meyer again.

• 31:32Speaker 05

  You may argue it shouldn't be. Maybe they're overreacting or they're maybe they're more concerned about their personal reputation, about the company reputation. But that's a fact. The fact is that when you interact with firms on an ongoing basis, the concern of the reputation is top priority. Then what you really have to ask yourself, right? It's like, how does a reputational dip impact a company's performance in a whole variety of different dimensions?

• 31:58Stephen J. Dubner?

  Okay, how does a reputational dip impact a company, especially in the long term? Braden King looked at the stock prices of companies that had been boycotted.

• 32:08Speaker 04

  I wanted to know, to what extent do investors actually care about boycotts?

• 32:13Stephen J. Dubner?

  And here's what he found. At first, when a boycott is announced, there's no discernible effect on the firm's stock price. But-

• 32:21Speaker 04

  After a company has been boycotted and it continues to receive media attention about the boycott, the effect of the boycott on the stock price is more negative. That is, investors tend to react more severely to a boycott the longer that boycott remains in the media's attention. And so that told me what investors care about. Is the ongoing media attention that this boycott is giving to the firm and the potential damage that this is doing to the company's reputation.

• 32:51Stephen J. Dubner?

  Evil Welsh is the UCLA economist who found the South Africa divestment campaign did not hurt those companies' stock prices. He's skeptical of Braden King's argument. He thinks it may contradict one of the fundamental arguments of modern economics, the efficient market hypothesis.

• 33:09Speaker 06

  And what that actually just says is that markets aren't stupid. So when you learn something, that an event has happened, what should happen at that instant in time is the stock price should move to reflect it and should be very hard later on to make money on this.

• 33:25Stephen J. Dubner?

  But what about Braden King's argument that a well-publicized boycott hurts a company's stock price over time?

• 33:32Speaker 06

  Well, I would suggest that he start a hedge fund where he basically starts shorting those companies because that would seem like a tremendously profitable investment strategy.

• 33:42Speaker 04

  I think it'd be very difficult to beat the market with this strategy.

• 33:46Stephen J. Dubner?

  That's King again.

• 33:47Speaker 04

  How could you time a shorting of a firm in order to take advantage of this kind of reputational effect? You know, I also understand the efficient market hypothesis and writing about the effect of boycotts or protests on stock price. I've argued that it's not because investors are fooled, it's because they're making sense of new information. And so then we have to ask ourselves, well, if investors are reacting to a boycott, what is the information they're gleaning from that event that would cause them to react in that way? And I think investors are probably smart enough to realize that boycotts are not going to have a big impact on sales because there's not a lot of empirical evidence to support that.

• 34:28Speaker 04

  But I think that investors are savvy in recognizing that a reputation matters in a number of ways besides just in how it affects consumers' decisions. For example, they know that employees want to work for a company that has a good reputation. You don't want to work for a company that has a reputation of doing bad things for the environment or doing bad things to its workers or bad things to other people.

• 34:52Stephen J. Dubner?

  Daniel Deere Meyer agrees that the indirect, or maybe unmeasurable, effects of a boycott can still be substantial.

• 35:01Speaker 05

  And it means that we continue to pay attention to something. Arguably, that can be just as important as the kind of economic mechanism of the boycott. It is entirely conceivable, even consistent with what we know about political processes in general, is that by keeping media interest and public interest focused on a particular topic, it can have an impact on public opinion and has an impact on what's on the agenda, what politicians consider to be important topics that need to be addressed.

• 35:29Stephen J. Dubner?

  Braden King's last point about how the reputation of a firm will affect the employees it attracts reminded me of an email exchange I recently had with a guy named Ben Hunter.

• 35:41Speaker 16

  I'm a scientist at Monsanto.

• 35:46Stephen J. Dubner?

  Monsanto is the giant agriculture company that's been targeted by many protesters for its massive reach and for breeding and selling genetically modified crop seeds. But when we first began emailing, Ben Hunter was not yet at Monsanto.

• 36:01Speaker 16

  Right, so I've studied plant sciences and plant genetics at Edinburgh University and Cambridge University. And then I was doing a postdoc in plant genetics and evolution at Harvard University.

• 36:13Stephen J. Dubner?

  He was looking for options outside of academia.

• 36:16Speaker 16

  I thought, maybe if I work in a company that's breeding plants, that's trying to sell seed of a plant, that that would really sort of excite me a lot more. And I applied to Monsanto and a bunch of other companies. And as I realized, the job opportunities that I would get would be like a really fun, challenging job. And then that got me really thinking about Monsanto itself and talking to friends and family about, hey, you've heard of Monsanto. What do you think about me working for them?

• 36:43Stephen J. Dubner?

  So what'd they think?

• 36:44Speaker 16

  There was a mixed responses, a lot of caution, some of them saying, well, you know, if you start working, going outside of academia, working for this large company, you're gonna get a... A significant sort of pay increase and you might get sort of locked into that sort of lifestyle. And others had lots of questions about Monsanto itself and cautions relating to that being a company with its reputation. The name Monsanto is, for some people, so heavily associated with this evil or negative connotation.

• 37:12Stephen J. Dubner?

  The thing is, Hunter's personal politics lined up pretty well with those very people.

• 37:18Speaker 16

  Definitely liberal. Most of the people who are against Monsanto, or their other ideologies, I align more with than people who would not have strong opinions around Monsanto. So they're often people who will share a lot vocally about the need to do something about global warming and to have some equal pay for men and women, all these sorts of things. And I love that people are sort of taking on these fights. But then that they also use their power to try and boycott companies like Monsanto, using a lot of, in what in my opinion is misinformation, is really sad. But you can get a lot of momentum by using misinformation.

• 37:56Stephen J. Dubner?

  So Hunter shares a lot of opinions with the kind of person who might boycott a company like Monsanto. But in his view, and with his background as a scientist, he thought they were wrong about Monsanto.

• 38:07Speaker 16

  I don't think the company's doing anything evil. It's a large company that makes the same decisions any other large company would.

• 38:14Stephen J. Dubner?

  This didn't mean that taking the job was an easy decision.

• 38:17Speaker 16

  I felt really baffled by this idea that I could get a job that I really wanted, but would have, on a day-to-day basis, feel sort of weird in the public to say like, oh, I work for Monsanto. Like, you know, if I meet a stranger in a bar or something, I'm not going to say, oh, I work for Monsanto, what do you do? That was the part that gave me sort of reservations and thinking, what if on Facebook I changed my job title to working at Monsanto? Am I going to shed friends?

• 38:44Stephen J. Dubner?

  Hunter took the job a few months ago. So far, he likes it a lot.

• 38:48Speaker 16

  I think the reality of the company is completely different to the public perception. The people I work with on a day-to-day basis are just, in my opinion, the completely normal people. The company's values are the values of a successful, large company, and they are not what the public perception might have you believe, that they're out to rip off and destroy agriculture and farmers.

• 39:10Stephen J. Dubner?

  All right, so that's just one man's story. It may or may not change anything you think about GMOs or big companies or anything, but it's a good illustration of the power of boycotting. Ben Hunter found a job he wanted with a company whose reputation had been, in his view, damaged. So the stigma imposed an extra cost on him, a cost in the end, he was willing to pay.

• 39:37Stephen J. Dubner?

  Now, our question of the day, you'll remember, was simply this: Do boycotts work? Here's what the evidence seems to suggest. The typical boycott is more smoke than fire, and it doesn't often seem to financially hurt the targeted company. But humans being human, and the court of public opinion working as it does, a boycott can color the reputation of a given firm, as it has for Monsanto and for its new plant scientist, Ben Hunter. And a boycott, when it reflects dissatisfaction with a larger social issue, can become some wind in the sail, the way the Montgomery Bus Boycott did, the way that even, perhaps, maybe, who knows,

• 40:21Stephen J. Dubner?

  maybe just a tiny bit, the Chick-fil-A boycott did.

• 40:25Speaker 04

  I think the activists would say that the boycott against Chick-fil-A is successful, even if they didn't get people who typically go to Chick-fil-A to stop buying Chick-fil-A sandwiches. And the reason they would say it was successful is because they got the media to pay attention.

• 40:42Stephen J. Dubner?

  The issue here, you'll remember, was same-sex marriage. The firm's CEO was against it. The boycott was in 2012. In 2015, the US Supreme Court ruled that same-sex marriage is a constitutional right and that every state in the US must allow it. So, did the Chick-fil-A boycott generate noise that drove attention to the issue? Or did the issue's pre-existing momentum create an environment for the boycott to make a lot of noise? What's the Chick-fil-A and what's the egg?

• 41:22Stephen J. Dubner?

  We'll probably never know. But just because a question does not have a concrete answer does not mean it isn't worth asking. I'm Stephen Dubner. This is Freakonomics Radio. Thanks for listening.

• 41:44Stephen J. Dubner?

  Freakonomics Radio is produced by WNYC Studios and Dubner Productions. This episode was produced by Greg Rosalsky. Our staff also includes Irvic Gunja, Jake Howitt, Merritt Jacob, Christopher Worth, Kasia Mahalovich, Alison Hockenberry, and Caroline English. You can find all our episodes at Freakonomics.com. You can also subscribe to the podcast on iTunes or wherever you get your podcasts.

• 42:21Stephen J. Dubner?

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• 42:52Stephen J. Dubner?

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• 43:29Speaker 18

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• 43:59Speaker 19

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