AI transcript
0:00:02 (dramatic music)
0:00:09 Imagine for a second that you work for a big consumer brand.
0:00:13 Maybe it’s sneakers or fast food or high-end wrist watches.
0:00:15 How do you persuade people that your product
0:00:17 is the one worth buying?
0:00:20 No matter how wonderful your sneakers or fast food
0:00:24 or watches may be, they are also inanimate objects.
0:00:26 They don’t have faces.
0:00:28 A watch has a face, but come on, you know what I mean.
0:00:31 So eventually, you may ask yourself,
0:00:36 what if I hired a well-known actor or comedian or athlete
0:00:40 to endorse my brand to put a face on it?
0:00:43 And now potential customers who may not have noticed
0:00:44 your brand are gonna be like,
0:00:48 ooh, if they like it, maybe I will too.
0:00:51 The practice of celebrity endorsement
0:00:52 has been around for a long time.
0:00:55 In the 1760s, the English pottery entrepreneur,
0:00:59 Josiah Wedgwood, created one of the first luxury brands
0:01:02 after receiving an endorsement from the Queen.
0:01:06 In ancient Greece, some of civilization’s earliest coins
0:01:10 had images of gods and goddesses, like Athena.
0:01:13 Who better to endorse a new product like money,
0:01:16 which you might otherwise be suspicious of?
0:01:20 But what happens if you attach a celebrity to your product
0:01:23 and that celebrity messes up?
0:01:30 – Police believe that O.J. Simpson is in that car.
0:01:32 We’ve received a report of a gun in the car.
0:01:34 The vehicle is registered to Al Kaling,
0:01:38 a former teammate, close friend of O.J. Simpson’s,
0:01:42 who has been a fugitive from justice now almost 12 hours.
0:01:46 – O.J. Simpson is just one example of many.
0:01:48 Today, on Freakonomics Radio,
0:01:51 a case study of another endorsement deal
0:01:53 that went terribly wrong.
0:01:54 – I mean, this is not just a mistake.
0:01:57 This is a crime, and this is something horrible.
0:01:59 – So what happens then?
0:02:02 We will try to answer that question starting now.
0:02:06 (upbeat music)
0:02:15 – This is Freakonomics Radio,
0:02:18 the podcast that explores the hidden side of everything
0:02:21 with your host, Stephen Dubner.
0:02:23 (upbeat music)
0:02:33 – John Cawley is a professor at Cornell University.
0:02:34 – So I’m a health economist,
0:02:36 and I’m really interested in the economics
0:02:37 of risky health behaviors,
0:02:40 in particular diet, physical activity, and obesity.
0:02:42 – Cawley is especially interested in how health behaviors
0:02:45 can be affected by government policy
0:02:48 and other top-down solutions.
0:02:51 The short answer is not very much.
0:02:54 In recent decades, we have heard a lot about nudges
0:02:57 and tweaks and incentives that are designed
0:03:01 to help people eat better, exercise more, et cetera,
0:03:03 but most of the policies that John Cawley
0:03:07 and his colleagues have analyzed just don’t move the needle.
0:03:09 There was one mild exception.
0:03:11 – One thing that we did find worked
0:03:13 is we conducted an RCT randomized experiment
0:03:17 of putting calorie labels on restaurant menus.
0:03:21 The data here came from Starbucks and Dunkin Donuts.
0:03:24 – And what we found is the getting the menu with the calories
0:03:27 did lead people to ordering 3% fewer calories.
0:03:28 So it’s not gigantic.
0:03:30 It’s not single-handedly gonna reverse the obesity epidemic,
0:03:33 but it’s a cheap policy that had a demonstrable result.
0:03:36 – And this got Cawley to wondering what else he could learn
0:03:39 by looking at data from restaurant chains.
0:03:41 – And so starting from that and thinking about like,
0:03:44 well, when would there be cases where people would be
0:03:45 potentially attracted to or deterred
0:03:48 from patronizing specific restaurant chains?
0:03:50 The realization of, oh my gosh, that Jared Fogle scandal
0:03:53 that occurred at Subway is definitely something to look at.
0:03:57 – Do you remember where you were and/or what you felt
0:04:01 when you first heard the news about the Jared Fogle scandal?
0:04:02 – Definitely don’t remember where I was,
0:04:06 but I mean, revulsion, definitely,
0:04:10 and kind of horror that someone who’d been going to schools
0:04:12 and holding up his big pair of pants,
0:04:14 trying to be like a role model,
0:04:18 would use his money and fame to do such horrible things.
0:04:19 This jumped out immediately as something
0:04:23 that had the potential to really move demand.
0:04:26 – Okay, let’s back up and fill in some gaps
0:04:28 in case you don’t remember or never even heard about
0:04:31 the scandal with Jared Fogle and Subway.
0:04:34 Let’s start with what is Subway?
0:04:36 – So Subway’s a fast food chain, it makes sandwiches,
0:04:38 they make it to order.
0:04:42 – Subway started in 1965 as a single sandwich shop
0:04:43 in Bridgeport, Connecticut.
0:04:47 It was owned by two families, the DeLuca’s and the Bucks,
0:04:50 under the same family ownership, Subway grew and grew
0:04:55 and grew to more than 35,000 stores across 100 countries.
0:04:59 In 2023, the original owners sold Subway
0:05:02 to a private equity firm called Rourke Capital
0:05:05 for about $9.6 billion.
0:05:08 Rourke also owns chains like Duncan, Arby’s,
0:05:10 Jimmy John’s and more.
0:05:14 So that’s Subway and who is Jared Fogle?
0:05:17 – The Jared Fogle story begins in the late 1990s
0:05:19 when he’s an undergraduate in college.
0:05:22 – This was at Indiana University in Bloomington.
0:05:25 – He weighed 425 pounds early in his college career
0:05:27 and wanted to make a big change.
0:05:31 So he began eating at Subway twice a day.
0:05:33 So what he said is I’ll have a six inch turkey sub
0:05:36 for lunch and a foot long veggie sub for dinner.
0:05:38 No condiments, no cheese on either one,
0:05:42 baked chips and a diet soda with each.
0:05:43 And I’m just gonna walk a lot.
0:05:45 He lost 245 pounds.
0:05:48 Someone who knew him as a freshman ran into him
0:05:50 when he was an upperclassman and was just shocked
0:05:52 and asked, “Well, how did this happen?”
0:05:54 Jared told the story and the guy said,
0:05:55 “I’m gonna tell somebody at the school newspaper.”
0:05:58 So the school newspaper did a story on Jared Fogle.
0:06:00 It then got picked up by Men’s Health Magazine
0:06:02 for a special they were doing on stupid diets
0:06:04 that actually work.
0:06:07 And so both the school newspaper clipping
0:06:10 and the Men’s Health article were seen by franchisees
0:06:13 of Subway who clipped it and sent it to headquarters
0:06:15 and said, “This seems like something we could use.”
0:06:19 They reached out to Jared and on January 1st, 2000,
0:06:21 they aired the first Jared Fogle commercial
0:06:25 where he explained that Subway is the healthy fast food
0:06:27 and that he lost 245 pounds
0:06:29 by eating Subway twice a day and walking.
0:06:30 (upbeat music)
0:06:31 – Here is Jared Fogle.
0:06:34 You may have seen him on the news or a talk show.
0:06:38 He was inspired by Subway’s great tasting sandwiches.
0:06:39 – Later commercials would often show him
0:06:42 with his pair of pants from when he weighed his heaviest
0:06:45 to illustrate the dramatic change in weight loss.
0:06:47 – Remember Jared from Subway?
0:06:49 He’s inspired a lot of people.
0:06:54 ♪ He’s looking good to show you the way ♪
0:07:00 ♪ His name is Jared and he’ll lead you to Subway ♪
0:07:04 – They shot about 300 television spots with him
0:07:07 and he also made a large number of personal appearances.
0:07:09 (upbeat music)
0:07:12 – And so it was that Jared Fogle over the course of a decade
0:07:16 became one of the most prominent celebrity endorsers
0:07:17 of his generation.
0:07:19 Although his case was special,
0:07:23 it was the endorsements that made him a celebrity.
0:07:26 There was something radically appealing, even sweet
0:07:29 about this combination of authenticity and fame.
0:07:32 Jared seemed to unlock something wild
0:07:35 in the culture of sandwich buying.
0:07:37 Between 1998 and 2011,
0:07:40 Subway went on a tremendous growth spurt.
0:07:42 Its overall revenues tripled.
0:07:46 Subway’s chief marketing officer, a man named Tony Pace,
0:07:49 said that between 1/3 and 1/2 of Subway’s growth
0:07:52 was due to the Jared Fogle campaign.
0:07:57 Pace, who later died in a snowmobile accident,
0:08:02 said that Jared Fogle was “woven into the fabric of the brand.”
0:08:04 The influential trade publication
0:08:07 Nations Restaurant News agreed.
0:08:08 – They said the Jared campaign is one
0:08:11 of the most successful restaurant campaigns ever.
0:08:13 – Now, you told us his story,
0:08:17 which was that he was eating a six inch sub for lunch every day,
0:08:20 a foot long vegetable sub for dinner.
0:08:22 You know a little bit about calories
0:08:27 and about caloric intake versus exercise as well.
0:08:30 When you heard that story for the first time,
0:08:35 that he weighed 425 pounds and lost 245 in a year,
0:08:39 primarily attributed to what he was eating,
0:08:41 what was your first thought of that claim?
0:08:43 – My first thought is he’s probably walking a lot,
0:08:46 but the other assumption is probably previously
0:08:48 he was consuming an awful lot of calories.
0:08:51 Sticking to this menu very likely could represent
0:08:53 a major reduction in calorie intake.
0:08:54 – Do we know what he was eating
0:08:57 and how much he was eating before the Subway diet?
0:08:58 – I’ve never heard that.
0:09:01 I mean, it could have been 18 cheeseburgers a day.
0:09:01 – Yeah.
0:09:04 – So Subway is booming.
0:09:07 Subway believes and the restaurant industry believes
0:09:10 that it’s booming in some substantial part
0:09:12 because of this guy named Jared Fogel.
0:09:14 And then what happens?
0:09:16 – Yeah, so in July of 2015,
0:09:19 the FBI raided Jared Fogel’s house.
0:09:22 – Investigators descend before Don
0:09:25 on the Indiana home of longtime subway spokesman,
0:09:27 Jared Fogel.
0:09:30 What makes the raid on Jared’s home particularly disturbing
0:09:32 is that it comes nearly two months
0:09:34 after the former executive director
0:09:36 of his nonprofit foundation was arrested
0:09:40 on federal child pornography charges.
0:09:42 – Jared, when he became relatively wealthy
0:09:45 from his income from Subway,
0:09:46 he set up a charitable foundation
0:09:49 and he hired someone to run it.
0:09:51 The charitable foundation wasn’t really doing anything.
0:09:53 It was a way to pay the guy who was heading it up
0:09:55 and what the guy was doing in exchange for the money was,
0:09:57 and I apologize, this is gruesome,
0:10:00 he was installing hidden cameras in his own house
0:10:02 and filming his own children naked.
0:10:04 And then also like children of his relatives,
0:10:06 children of his friends who were over,
0:10:08 and then he was sending them to Jared.
0:10:10 And Jared would be emailing back and commenting
0:10:14 and asking for more and sharing what he’d like to do.
0:10:18 So the FBI got wise to the foundation head,
0:10:20 raided his house, seized his hard drive,
0:10:22 found the images and found the communications with Jared
0:10:24 and they raided Jared’s house.
0:10:27 And that was when it just was all over the headlines
0:10:30 that Jared Fogle had been arrested for child porn.
0:10:32 It came out too that he had crossed state lines
0:10:33 to have sex with underage girls.
0:10:36 He had actually solicited prostitutes saying,
0:10:39 “I want you to get me a young girl, the younger the better.”
0:10:41 And so it was really reprehensible stuff.
0:10:43 The sentencing judge said that it was extreme
0:10:45 and it’s perversion.
0:10:47 So it was just really, really horrible events.
0:10:52 And industry observers said this is really bad news
0:10:54 for Subway because they said things like,
0:10:57 “From now on, when you see a Subway ad,
0:10:58 you’re going to be thinking of Jared
0:10:59 and what he did to those girls.”
0:11:02 (upbeat music)
0:11:05 – So how did Subway respond to the scandal?
0:11:07 Think about how you might respond
0:11:10 if your company’s superstar spokesperson
0:11:13 was found to have used the money you paid him
0:11:17 to set up a fake foundation that fed him child pornography.
0:11:21 Subway had long been famous for being publicity shy.
0:11:23 Their top executives rarely gave interviews
0:11:25 or even appeared in public.
0:11:28 And the response to this scandal was predictably muted.
0:11:30 On the day that Fogel was arrested,
0:11:33 they published a post that said Subway and Jared Fogel
0:11:36 have mutually agreed to suspend their relationship
0:11:38 due to the current investigation.
0:11:40 They also scrubbed all mention of Fogel
0:11:42 from their social media accounts.
0:11:45 In August, 2015, Fogel pleaded guilty
0:11:47 to child pornography trafficking
0:11:49 and sexual conduct with minors.
0:11:52 He is now serving a 15 year sentence.
0:11:53 The scandal happened
0:11:56 under the old family ownership of Subway.
0:11:59 We reached out to the current owners, Rourke Capital.
0:12:00 They sent a statement that reads,
0:12:02 our thoughts continue to go out
0:12:05 to all of those who were victimized by Mr. Fogel.
0:12:07 When we learned of Mr. Fogel’s behavior,
0:12:08 we took immediate action
0:12:10 and he has not been associated with the company
0:12:13 in any way since his arrest.
0:12:15 But can a company just say,
0:12:18 hey, stop paying attention to this person
0:12:20 that we’ve been begging you to pay attention to?
0:12:24 That’s what John Coley wanted to know.
0:12:26 As he considered how to answer this question,
0:12:29 he turned to some influential economic research
0:12:32 on the notion of repugnance.
0:12:34 – So Al Roth, who’s a Nobel Prize winning economist,
0:12:38 wrote an article about how repugnance or visceral disgust
0:12:40 can be something that affects market transactions
0:12:42 just as much as prices.
0:12:45 He gives examples of how things are outlawed
0:12:46 like the consumption of horse meat
0:12:50 or selling a kidney or paid sex work.
0:12:52 And people just find them offensive
0:12:54 and want them to not happen.
0:12:56 And so it really wouldn’t be surprising
0:12:58 if people, when they see a subway,
0:13:00 remember the headline they just saw,
0:13:02 the CNN story they just saw
0:13:04 about these reprehensible crimes.
0:13:07 – When I think of repugnance,
0:13:10 I think of transactions that some people want to engage in
0:13:13 and other people don’t think they should be allowed to,
0:13:15 normally for moral reasons.
0:13:18 And that is Al Roth himself, he teaches at Stanford.
0:13:22 He points out that repugnance doesn’t always affect markets
0:13:23 the way you might think.
0:13:25 – I find it very hard to predict.
0:13:26 And one reason it’s hard to predict
0:13:28 is it’s different in different places.
0:13:30 Disgust is easy to predict.
0:13:33 If someone spits into your coffee,
0:13:34 you won’t finish your coffee,
0:13:36 no matter where in the world you are.
0:13:40 But kidney exchange, surrogacy, prostitution,
0:13:42 those are things that are repugnant in some places
0:13:43 and not in others.
0:13:46 Horse meat, you can order it in some places
0:13:47 and not in others.
0:13:48 – It’s also worth pointing out
0:13:51 that repugnance is a moving target.
0:13:53 It shifts over time.
0:13:55 Consider slaveholding.
0:13:58 Today, that is repugnant in most places.
0:14:01 In the past, it was the norm.
0:14:03 Or here’s an example of things changing
0:14:05 in the opposite direction, life insurance.
0:14:08 Not so long ago, it was considered repugnant
0:14:12 for someone to profit from the death of a loved one.
0:14:14 Today, life insurance is seen as something
0:14:16 you’d be foolish to do without.
0:14:18 Or at least that’s the story we’ve been told
0:14:20 by life insurance firms.
0:14:23 So how did Al Roth think the public would react
0:14:26 to the repugnant news about Jared Fogle?
0:14:28 – It seems like a plausible hypothesis
0:14:31 that if the spokesperson were really important
0:14:34 and then he turns out to be a terrible guy,
0:14:37 then you might change your mind in much the same way,
0:14:39 but not with exactly the same consequences
0:14:42 that you might associate your feelings
0:14:43 about Elon Musk and Tesla
0:14:46 and about Donald Trump and Trump hotels.
0:14:48 If you don’t like Elon Musk,
0:14:50 not buying a Tesla avoids giving him some of your money,
0:14:52 but not buying a subway sandwich
0:14:53 which you may have discovered you liked
0:14:57 because of this criminal guy doesn’t harm him at all.
0:15:00 It wasn’t that subway sandwiches approved
0:15:01 of molesting children.
0:15:04 They were as much a victim as the general public was.
0:15:06 – And John Cawley again.
0:15:08 – So this seemed to be a great opportunity to test for,
0:15:11 to what extent do people, even though, you know,
0:15:13 Jared had nothing to do with the quality of the food
0:15:17 or the management, people might just see that subway sign
0:15:19 and remember him and just turn away and go somewhere else.
0:15:23 – So what did Cawley find?
0:15:25 That’s coming up after the break.
0:15:27 I’m Stephen Dubner and this is Freakonomics Radio.
0:15:40 – The Cornell health economist, John Cawley,
0:15:43 recently teamed up with five co-authors on a research paper.
0:15:47 The co-authors are Julia Edel-Battel, Scott Cunningham,
0:15:50 Matt Eisenberg, Alan Matthews and Rosemary Avery.
0:15:54 The paper is called “The Role of Repugnance in Markets,”
0:15:59 how the Jared Fogel scandal affected patronage of subway.
0:16:01 And what did they wanna do with this paper?
0:16:04 – What we wanna do is estimate what was the impact
0:16:07 of the Jared Fogel scandal on patronage of subway.
0:16:08 You can’t just go look at a stock price
0:16:10 to see how investors responded
0:16:11 because it’s a privately held company.
0:16:13 There is no publicly traded stock.
0:16:15 You can’t look at quarterly earnings reports
0:16:16 because there aren’t any.
0:16:18 And also you don’t wanna just rely
0:16:20 on whatever executives of the company say
0:16:22 because you can’t independently verify it.
0:16:24 – So what did you do instead?
0:16:26 – So what we did is we went to a dataset
0:16:29 called the Simmons National Consumer Survey.
0:16:32 They survey a large number of people nationwide
0:16:34 and they ask them really detailed questions
0:16:37 about the stores, the companies they patronize.
0:16:39 And in particular, they ask about their patronage
0:16:42 of 58 different restaurants in the past 30 days.
0:16:44 They conduct it four times a year.
0:16:46 So that allows us to look at changes
0:16:48 in relatively short periods of time
0:16:52 in the restaurants that people say they’re visiting.
0:16:53 – And these data go back how far?
0:16:57 – We’re looking at from January 1st, 2014
0:16:59 until December 31st of 2016.
0:17:01 So we’re looking over a three year period,
0:17:03 the middle of which is the information shock.
0:17:08 Information shock is economists speak for, in this case,
0:17:11 the burst of news that accompanied the revelation
0:17:14 of Jared Fogle’s child pornography crimes.
0:17:17 – One thing that makes the event we’re studying
0:17:21 suitable for study is that nobody knew
0:17:22 the bad stuff about Jared.
0:17:26 Nobody knew that until the FBI raided his house.
0:17:27 And as soon as they raided his house,
0:17:29 it was front page news all over America.
0:17:31 And it was confirmed shortly thereafter
0:17:32 through a guilty plea.
0:17:34 Most of the time with an ad campaign,
0:17:37 it’s hard to measure how much people have been exposed to.
0:17:39 But this is a case where really nobody knew anything
0:17:42 until one day like everybody knew everything.
0:17:44 – John, I have a question that is personal,
0:17:46 perhaps a bit intrusive.
0:17:48 So feel free to take a pass if you’d prefer.
0:17:50 But I once heard you give an interview,
0:17:54 were you discussed a troubling incident in high school
0:17:56 with your debate coach?
0:17:59 And I was really taken with your response to it,
0:18:04 which was to get through it, but then come back
0:18:06 and to get justice not only at your own school,
0:18:08 but then at the next school where the guy went to.
0:18:12 And I was really curious if that experience
0:18:14 at all informed the way that you approached
0:18:17 this topic with Jared Fogle in Subway.
0:18:20 – Yeah, so the background is I had a high school debate coach
0:18:23 who molested me and he molested other people.
0:18:26 It wasn’t really until college that I was reckoning with it.
0:18:28 And then wrote a letter to the school principal
0:18:29 and got him fired.
0:18:31 He moved to another high school in town.
0:18:33 I went to the people who knew the administration
0:18:36 of that high school and got him fired from there.
0:18:38 And I went to the police and explained what happened,
0:18:40 but he never went to jail.
0:18:43 It does make me think that we,
0:18:46 it’s this kind of issue is worthy of study.
0:18:49 And there’s lots of different ways you can contribute
0:18:49 to that.
0:18:51 And this is a small way that I’m contributing
0:18:53 to better understand what people think
0:18:56 and what they do when they learn information
0:18:58 like what Jared Fogle did.
0:19:00 – It did make me wonder if your personal experience
0:19:03 contributed to your assessment of what you thought
0:19:07 would happen with Subway after the Fogle scandal.
0:19:10 – Another thing that you’re making me think about
0:19:12 is the distinction between being an objective researcher
0:19:14 and letting the data speak for themselves
0:19:16 and fairly and honestly reporting what you find.
0:19:18 The difference between that and the way you wish
0:19:20 things worked in the world.
0:19:21 I would hope.
0:19:24 And I think there was like universal disgust and anger
0:19:27 at this person who betrayed so many people’s trust.
0:19:29 That doesn’t mean Subway has to experience lower sales
0:19:30 because of it though.
0:19:36 – So did Subway experience lower sales?
0:19:38 Kauley and his colleagues did have data
0:19:40 from the Simmons marketing survey.
0:19:43 By the way, that’s the same data source that Kauley used
0:19:45 on his study about posting calorie counts
0:19:47 on a restaurant menu.
0:19:49 To get at the Jared Fogle effect,
0:19:51 Kauley would need to measure the Simmons data
0:19:56 against a control variable, a different fast food restaurant.
0:19:58 This required the use of what researchers
0:20:00 call synthetic control.
0:20:04 – Rather than us saying, well, here’s what we think
0:20:07 is a good comparison or control firm for Subway
0:20:11 and guessing like DeBella’s or Firehouse Subs
0:20:13 because they’re sandwich companies.
0:20:15 We can instead use the method of synthetic control
0:20:18 and that will go and find the optimal firms
0:20:22 that best resembles Subway prior to this shock.
0:20:25 In this case, interestingly, it picked just three.
0:20:28 It was McDonald’s, Whataburger and Jack in the Box.
0:20:30 So all three coincidentally just turned out
0:20:31 to be burger chains.
0:20:33 It didn’t pick any sandwich chains.
0:20:36 – I’m sorry, back up the control or the metrics
0:20:39 on which they aligned with Subway were what though?
0:20:40 – Great question.
0:20:42 – Is it population metrics?
0:20:44 – What we want is a synthetic, a fake Subway
0:20:46 that’s as similar to Subway before the shock,
0:20:48 but then the question is similar in terms of what?
0:20:51 The standard answer is lagged values
0:20:53 of the dependent variable or in our case, patronage.
0:20:56 That it has similar trends in patronage prior to the shock,
0:20:59 but we also matched it on demographics
0:21:00 of people who patronize it.
0:21:04 So the percent who are women, low income, low education.
0:21:05 – So these are what you might call
0:21:09 observationally equivalent customer populations, yes?
0:21:11 – Yep, chains with similar demographics
0:21:12 among their patrons and similar levels
0:21:14 of trends in patronage.
0:21:17 And the funny thing is like that’s the feature, not the bug.
0:21:21 It doesn’t depend on us using deduction or logic
0:21:22 to guess what’s the best control.
0:21:25 It lets the data speak for itself.
0:21:26 – Okay, so you start working with the data.
0:21:28 Tell me what happens next.
0:21:30 – Yep, we now have a synthetic Subway
0:21:31 that we can compare to regular Subway.
0:21:33 And what we look to see is,
0:21:37 does the real Subway become significantly different
0:21:40 from the synthetic Subway after the shock?
0:21:42 – And what were you expecting, John?
0:21:43 – I mean, I expected, yes,
0:21:46 that people would not want to go to Subway as often
0:21:48 or as much in the wake of this information.
0:21:51 – And what magnitude of a drop were you thinking?
0:21:54 – I wouldn’t have been surprised by 5% to 10% drop
0:21:56 in patronage that eventually went away.
0:21:58 Like maybe it goes away in six months.
0:22:02 And we really find that patronage remained flat.
0:22:05 There’s no significant change in patronage.
0:22:07 – Can you just summarize this in lay terms?
0:22:11 Like a sandwich chain has an everyday endorser
0:22:14 who turns out to be very, very popular.
0:22:17 He becomes almost the face of the franchise.
0:22:20 He pleads guilty ultimately to sex crimes
0:22:24 and child abuse, and nothing happens to the product.
0:22:27 I mean, it just sounds, it sounds hard to believe.
0:22:29 Did you have a hard time believing it?
0:22:31 – Well, I mean, there are these two,
0:22:32 like decision making systems.
0:22:34 So there’s system one, which is fast and emotional
0:22:35 and may involve repugnance.
0:22:37 And then there’s system two, which is more rational
0:22:39 and slower to react.
0:22:42 I’m certain when people saw the news that they were revolted
0:22:45 and they were disgusted and experienced repugnance.
0:22:48 But when it came time to choose where to go to eat,
0:22:51 they apparently used system two and thought like,
0:22:52 well, it’s got nothing to do with the food.
0:22:54 It’s got nothing to do with the company
0:22:58 because we’re not finding any effect of this scandal
0:22:59 on people’s probability of going.
0:23:03 – Is it possible that this evidence just shows
0:23:04 that our personal preferences,
0:23:07 including like what I want to put it in my mouth today
0:23:11 are just much stronger a driver than our sense of,
0:23:13 I don’t want to say morality or guilt,
0:23:17 but plainly a person who was affiliated with this brand
0:23:18 and did something horrible.
0:23:21 I would think that that would outweigh my decision
0:23:24 about what I want to eat for lunch today, but it doesn’t.
0:23:27 So what’s the takeaway in that regard for you?
0:23:30 – So you’re right, like people’s habits around food are strong.
0:23:32 It’s really hard to change people’s behavior.
0:23:34 We know that from a lot of different studies,
0:23:37 but there’s a lot of other research that does document
0:23:40 that people do respond to negative information about firms
0:23:42 when it’s relevant to the product.
0:23:46 For example, when there was adulterated infant formula
0:23:49 coming over from China that had killed several children
0:23:51 and hospitalized many others,
0:23:53 there was a significant decline in exports
0:23:56 of all dairy products from China for quite a while.
0:23:59 Or when British petroleum had the deep water horizon oil spill
0:24:01 and it turned out that it was due
0:24:04 to their lack of safety precautions in the US,
0:24:07 people decreased their purchases of BP gasoline.
0:24:10 – Another example you write about is sexual abuse
0:24:11 in the Catholic church.
0:24:13 And you write that it reduced membership
0:24:16 at least in the measured area by 3%,
0:24:18 which is a large number
0:24:20 when you’re dealing with something as big as the Catholic church,
0:24:23 but you were thinking that the Jared Fogel effect
0:24:26 would be two or three times larger than that.
0:24:28 Again, is this all because of the disconnect
0:24:32 between who the person was and what the product was?
0:24:35 – So this paper concerned the Boston Globe spotlight series
0:24:38 that exposed not just sexual abuse by Catholic priests,
0:24:42 but institutional protection of these priests
0:24:44 where the church administration knew
0:24:46 what these priests were doing and hid it
0:24:49 and moved them around to help them evade accountability.
0:24:54 And so it implicated not just numerous employees
0:24:55 of the firm, you could say,
0:24:57 but also the management in a very systematic way.
0:24:59 And so that may explain why
0:25:02 there was a much more dramatic reaction.
0:25:04 – So in the paper, you write that the absence
0:25:07 of a detectable impact of the Jared scandal
0:25:10 on patronage of Subway raises the question
0:25:12 of whether Subway may have been previously
0:25:15 overestimating the extent to which Jared was responsible
0:25:17 for their increased sales.
0:25:18 Say a little bit more about this,
0:25:20 and I’d love to hear you talk as much as you want
0:25:23 about how firms will often tell a story
0:25:27 that sounds believable, sounds appealing,
0:25:30 but is kind of free of empiricism.
0:25:33 – Yeah, so the fact that we can’t reject the null hypothesis
0:25:36 that this had no impact, like there’s no detectable impact
0:25:38 of this information on people’s purchases
0:25:40 or patronage of Subway does make you question,
0:25:42 well, wait a second, how could this be true
0:25:46 when we were told all along by insiders to the company,
0:25:48 by the restaurant industry,
0:25:50 that this was one of the most successful ad campaigns ever,
0:25:52 and he was the face of it.
0:25:55 It is possible that maybe he was incredibly influential
0:25:57 and these ads were really powerful
0:26:00 and moved demand early in the ad campaign,
0:26:03 but maybe by this point it had run its course.
0:26:05 And even though Subway was continuing to pay him,
0:26:07 it wasn’t really adding much.
0:26:09 But another possibility is that all along
0:26:12 the firm was overestimating
0:26:14 how much the ad campaign was contributing
0:26:15 to their bottom line.
0:26:17 – Well, I think that’s right.
0:26:20 I think that there’s an incentive for marketing directors
0:26:22 to tell their companies that they,
0:26:25 the marketing directors are having a great effect on sales.
0:26:27 – That again is Al Roth.
0:26:29 – And if what you’ve done is hired a spokesperson,
0:26:32 then you say the spokesperson has had a great effect on sales.
0:26:36 – We did a two-part series of Freakonomics Radio a while back
0:26:39 called Does Advertising Actually Work?
0:26:40 The short answer?
0:26:43 Not nearly as much as advertising
0:26:45 and marketing departments say.
0:26:48 One paper we cited in those episodes
0:26:50 is by the Berkeley economist Steve Tadellis
0:26:52 and two co-authors.
0:26:54 They used data from eBay.
0:26:56 Here’s Al Roth again.
0:26:59 – Apparently eBay used to buy ads on Google search
0:27:00 on the name eBay.
0:27:02 So if you searched for eBay,
0:27:05 you saw not just eBay’s website,
0:27:07 but you also saw an ad from eBay.
0:27:10 And what the marketing department at eBay
0:27:12 told the executive suite at eBay was,
0:27:15 we’re really effective at driving sales
0:27:18 because lots and lots of people who click on our ad
0:27:20 proceed to buy something on eBay.
0:27:23 And what Tadellis and his colleagues did as an experiment
0:27:24 was they said, you know,
0:27:26 a lot of people who click on the ad,
0:27:27 they were searching for eBay.
0:27:29 They were intending to buy something on eBay.
0:27:31 They just wanted to find the web address
0:27:32 so they could click on it.
0:27:34 And if we don’t advertise,
0:27:36 we’ll get just as much revenue
0:27:38 because instead of clicking on the ad,
0:27:39 they’ll click on the organic search result,
0:27:41 which will come up first.
0:27:43 So that was a case where there was a claim,
0:27:46 but no evidence that the ads were leading to the purchases.
0:27:49 And that could well be the case with the spokesperson.
0:27:52 – It may be that academic researchers
0:27:55 are suspicious of the power of advertising
0:27:57 and of spokespeople,
0:28:01 but most companies don’t seem to be suspicious at all.
0:28:03 Take a look at advertising during the Super Bowl,
0:28:07 which is easily the biggest annual TV event in the U.S.
0:28:10 and therefore the biggest annual advertising event.
0:28:11 Over the last four years,
0:28:15 between 60 and 75% of Super Bowl ads
0:28:17 featured at least one celebrity
0:28:19 and usually more than one.
0:28:23 So if you believe that celebrity endorsements do work,
0:28:26 the question is why?
0:28:31 After the break, it is time to cue your inner primate.
0:28:35 We want the things that high status individuals have.
0:28:36 – I’m Stephen Dubner.
0:28:37 This is Freakonomics Radio.
0:28:38 We’ll be right back.
0:28:44 (upbeat music)
0:28:48 Even though academic researchers are skeptical
0:28:50 of the power of celebrity endorsement,
0:28:52 the practice rolls on,
0:28:55 despite the significant cost to the firms.
0:28:58 LeBron James signed a lifetime deal with Nike
0:29:02 that could pay out an estimated $1 billion.
0:29:05 Taylor Swift has endorsed Diet Coke, Apple Music,
0:29:07 Keds, AT&T, CoverGirl,
0:29:09 and she reportedly almost reached an agreement
0:29:12 to endorse the cryptocurrency exchange FTX
0:29:15 for a reported $100 million.
0:29:19 And for nearly 20 years, starting in 1975,
0:29:21 Hertz Rental Cars ran what was considered
0:29:24 an exceptionally successful marketing campaign
0:29:27 featuring OJ Simpson dashing through airports
0:29:29 and wowing the spectators.
0:29:32 ♪ Go OJ, wow ♪
0:29:37 ♪ Gave you in, gave you out with super speed ♪
0:29:42 ♪ The superstar in Rental Cars ♪
0:29:44 – Hertz took Simpson off the air
0:29:46 once he was charged with murdering his ex-wife
0:29:47 and her friend.
0:29:49 At the time, he was being paid
0:29:51 more than half a million dollars a year.
0:29:54 – Celebrity endorsements are extremely expensive.
0:29:55 – And that is…
0:29:57 – Elizabeth Zab Johnson.
0:30:00 – I am the executive director and senior fellow
0:30:02 with the Wharton Neuroscience Initiative
0:30:04 at the University of Pennsylvania.
0:30:05 – Where does Zab come from?
0:30:09 – The middle three letters of Elizabeth.
0:30:11 There are many Elizabeth Johnson’s in the world,
0:30:14 but there is only one Zab Johnson.
0:30:16 – As far as you know.
0:30:17 – As far as I know, actually,
0:30:18 I know that there’s a second Zab Johnson
0:30:21 and she’s a developmental psychologist.
0:30:23 And I’m pretty sure she Googled her name
0:30:25 and found my nickname and liked it.
0:30:27 – Oh, no.
0:30:29 – But I’ve never called her out on it.
0:30:30 – You’re doing it right now.
0:30:31 – I am.
0:30:35 – Johnson teaches in the marketing department at Penn
0:30:37 and she has studied celebrity endorsements.
0:30:41 As she was saying, they are expensive.
0:30:44 – And they are inherently risky
0:30:48 because you’re associating your brand with a person
0:30:52 that may have behaviors that don’t all match up
0:30:56 with your values and your idea of what the brand represents.
0:30:58 – So expensive and risky,
0:31:01 those are two pretty strong negative words.
0:31:04 And yet there is a multi-billion dollar industry
0:31:06 in celebrity endorsement.
0:31:10 So who is not buying what you are selling and why not?
0:31:13 Why do so many people proceed with it despite those risks?
0:31:17 – Social hierarchy and social status matter to us
0:31:20 as humans and as primates.
0:31:24 And so we want the things that high status individuals have
0:31:29 we’re in a really fractured noisy advertising environment.
0:31:33 So you wanna create memorable content.
0:31:36 You wanna create things that people will go back to
0:31:37 and view again and again.
0:31:40 – But there are other ways to do all that without a celebrity.
0:31:44 Why is the celebrity the first choice?
0:31:47 – I think there’s some expectations around it.
0:31:49 You know, you’re not just watching the game.
0:31:50 You’re coming to watch the commercial.
0:31:51 Why are you watching the commercials?
0:31:53 ‘Cause you also wanna see the celebrities
0:31:55 and see what, you know, again,
0:31:58 that sort of driving that fundamental biological need
0:31:59 that we have.
0:32:00 – So I don’t know how closely, if at all,
0:32:03 you followed the breakup of Kanye West and Adidas.
0:32:06 They had this hugely successful partnership.
0:32:08 His Yeezy sneakers brought in something like $2 billion a year
0:32:11 roughly 10% of their revenue.
0:32:14 But he had always been a complicated partner, let’s say,
0:32:17 and his behavior got more erratic, more inappropriate,
0:32:20 including some very public anti-Semitism.
0:32:23 So Adidas finally broke things off with him,
0:32:26 but they had, I guess, millions of pairs of sneakers
0:32:28 already manufactured when they broke up.
0:32:30 I guess they could have just burned them or something,
0:32:33 but instead they decided to sell them
0:32:34 and donate the proceeds to charities.
0:32:37 What did you think of that solution?
0:32:40 – Their decision to release and sell,
0:32:44 but not make profits or be obligated to give Kanye
0:32:48 any of the revenue is probably a positive one.
0:32:52 Adidas realizes that right now consumers really need them
0:32:55 to espouse social values that resonate
0:33:00 with younger people and with the consumer at large.
0:33:03 So I think the idea of burning shoes
0:33:06 and creating environmental pollution
0:33:09 from that process as well as waste,
0:33:12 I think was probably too big of a burden for them.
0:33:14 So this was the right solution.
0:33:17 I think it’s a great solution, actually.
0:33:19 – On the other hand, you’re wearing
0:33:21 or at least owning the product of someone
0:33:23 who’s been disgraced, at least in the eyes of many, right?
0:33:27 – I mean, with every product that we consume,
0:33:29 there are always those things at play.
0:33:32 With shoewear in particular,
0:33:36 we know that those are mostly being manufactured
0:33:38 in environments that I don’t think we think
0:33:41 are the right manufacturing environments
0:33:42 for modern day consumers,
0:33:43 but at the same time,
0:33:47 we still will pay hundreds of dollars for them.
0:33:50 – I don’t know if you’ve ever visited Auschwitz,
0:33:54 but there are these collections of things
0:33:57 that were taken from the people who were sent there
0:33:59 and then usually killed there, most of them Jews,
0:34:02 but not all these gigantic piles of eyeglasses,
0:34:06 gigantic piles of suitcases and gigantic piles of shoes.
0:34:07 I wonder, do you think there might have been something
0:34:10 fruitful to do with those whatever million
0:34:12 or however many Yeezys there were,
0:34:14 some kind of public sculpture
0:34:16 that might have been a better solution
0:34:19 than going ahead and selling the thing
0:34:20 that was made by the person
0:34:23 that you are supposed to be distancing yourself from?
0:34:25 – That’s an interesting idea.
0:34:27 I mean, I think Adidas had to be really careful
0:34:31 because the founder had been part of the Nazi party
0:34:34 and it was a point of shame for the company.
0:34:36 There could have been a huge backlash
0:34:38 to something like that.
0:34:39 – A little bit too on the nose.
0:34:41 – Too on the nose, right?
0:34:45 And not at all the same, right?
0:34:46 – Not at all the same.
0:34:49 – So I think that this is probably the better move.
0:34:52 – I guess this is why I’m not in corporate marketing.
0:34:56 – And maybe better than sending Yeezys
0:35:00 to underprivileged children in developing nations
0:35:03 that could also be seen as being bad.
0:35:06 I think in a sense, maybe this was the right call.
0:35:12 And yet despite the risk of celebrity endorsements
0:35:16 and despite the expense, there are significant upsides.
0:35:18 That is a conclusion that Zab Johnson
0:35:20 and three co-authors reached.
0:35:21 In a recent study, they called
0:35:25 how celebrity status and gaze direction in ads
0:35:28 drive visual attention to shape consumer decisions.
0:35:32 – In this particular study, we used Snoop,
0:35:37 Scarlett Johansson, Michael Jordan, David Beckham.
0:35:39 They also used ads that didn’t have celebrities
0:35:41 in order to track the difference.
0:35:43 Some of the ads would show the celebrity
0:35:46 looking toward a snack food that they were endorsing.
0:35:51 – Cheezits, Nutrabars, Snickers Oreos.
0:35:54 – By tracking eye movements, Johnson could tell
0:35:58 whether research subjects followed the celebrity’s gaze
0:36:00 and looked at the product
0:36:03 or whether they were so fixated on the celebrity
0:36:05 that they ignored the product.
0:36:06 – In the psychology literature,
0:36:08 that’s called the vampire effect,
0:36:11 the celebrity overshadows the product.
0:36:15 If that’s true, then it’s not going to work, right?
0:36:17 That could be a really big disaster.
0:36:19 – Okay, so what effect did you find
0:36:21 when consumers look at a celebrity
0:36:23 who is looking at a product?
0:36:27 – So we found that even though people spend less time
0:36:30 looking at the product, it builds confidence
0:36:32 and surety around the product
0:36:35 just by being paired with a celebrity.
0:36:36 And that was enough to nudge people
0:36:39 to make choices of snack foods
0:36:41 that they had felt on the fence about
0:36:44 towards the one that had been presented with a celebrity.
0:36:48 – And could I take that finding and extrapolate from it
0:36:52 the idea that celebrity endorsement, quote, works?
0:36:54 – I mean, this was a single intervention.
0:36:56 This was the single presentation
0:36:58 of an advertisement for four seconds.
0:37:01 So if you think about how many times
0:37:03 we’re actually visually presented
0:37:04 with this kind of information
0:37:06 and that little bit of confidence,
0:37:10 if you can think about that as an aggregation over time,
0:37:13 it is probably going to be pretty successful.
0:37:14 That’s my take.
0:37:21 – Now, this was one small study by one neuroscientist.
0:37:23 The economist John Colley walked us through
0:37:26 some of the other literature on celebrity endorsements.
0:37:29 – Craig Garthwy and Northwestern’s done a neat paper
0:37:32 on the effect of an endorsement of your book
0:37:36 by Oprah’s book club and found that it led to a jump in sales
0:37:37 not just of the recommended book,
0:37:40 but also of other books written by that same author.
0:37:42 And interestingly, it didn’t increase book sales.
0:37:44 People didn’t buy any more books,
0:37:46 they just switched to buying the one Oprah recommended.
0:37:48 And then I guess Craig really is a fan of Oprah.
0:37:50 He wrote another paper about Oprah’s endorsement
0:37:52 of Senator Obama for president
0:37:55 and estimates the impact that that had on his votes
0:37:57 and contributions and voter turnout.
0:37:59 He estimates it got Senator Obama
0:38:00 an additional million votes.
0:38:02 – To be fair, Oprah is an outlier as well
0:38:03 because she’s so huge.
0:38:06 Additionally, with her book recommendations,
0:38:08 there’d never been anything like that
0:38:09 in the history of book recommendations,
0:38:10 at least in modern history.
0:38:12 And it wasn’t just an endorsement,
0:38:15 it was a call to action to everybody go buy this book.
0:38:19 What do we know about the more general state of endorsement?
0:38:22 Let’s say the Bron James is endorsing Nike.
0:38:26 What do we know about the power of that type of endorsement
0:38:27 where there’s some affiliation,
0:38:30 but not necessarily a call to action?
0:38:31 – It’s a great question.
0:38:33 I don’t have a good answer for you.
0:38:35 The discussion that you had in your earlier episodes
0:38:37 about does advertising really work?
0:38:40 The work of Anna Tuckman finds very little increase
0:38:43 in sales of e-cigarettes due to TV advertising.
0:38:46 The work of Steve Tadellis finds a negligible return
0:38:48 to paid search ads for eBay.
0:38:52 Brett Gordon has found that firms rule of thumb
0:38:55 for guesstimating the payoff to ads
0:38:58 often vastly overstates what the true payoff actually is.
0:39:01 There were explanations in that series
0:39:02 that we did one of which came from Steve Levitt,
0:39:04 which is the people responsible
0:39:07 for soliciting the budget for marketing and advertising
0:39:09 are the same people responsible for measuring
0:39:11 and making claims about the efficacy.
0:39:13 Is that the best explanation
0:39:15 for why there can be a gap between the two?
0:39:17 – I think it’s one possible explanation.
0:39:19 I also think of public health.
0:39:21 So a lot of the work I do is in health economics
0:39:24 and very often people in public health
0:39:25 will be very well-intentioned
0:39:28 and will propose some intervention
0:39:30 and they claim we’re seeing amazing results
0:39:31 in pilot studies.
0:39:34 There’s a sense of like, aren’t good intentions enough?
0:39:36 And I could imagine something being similar
0:39:38 with marketing of like, how couldn’t this work?
0:39:41 This is what generations of ad people have done.
0:39:43 But again, this is how science progresses.
0:39:45 This is how we make sure we’re not wasting resources
0:39:48 is we need to rigorously evaluate everything we’re doing.
0:39:54 – So is Jared Fogle a good story or example
0:39:59 about why it makes sense for firms like Geico
0:40:02 to use an animatronic or whatever clay gecko
0:40:03 for spokesperson?
0:40:06 I mean, anybody you hire potentially is risky.
0:40:07 – That’s a really good point.
0:40:09 I mean, another example is like universities
0:40:11 have gotten very careful
0:40:13 about naming any building after a living person.
0:40:14 So once someone is deceased
0:40:17 and you know everything that they’ve done pretty much,
0:40:18 then you can make that decision.
0:40:20 But you don’t wanna be on the hook if, you know,
0:40:24 there’s a lot of sackler wings of museums out there
0:40:26 that since the Oxycontin opioid scandal
0:40:28 that are probably causing a lot of regret.
0:40:29 – I’m curious when you look back,
0:40:34 were there other firms in the wake of the Jared Fogle scandal
0:40:37 who cut loose endorsers
0:40:41 that perhaps they may have been quietly worried about?
0:40:44 – Oh wow, that’s a good question.
0:40:49 I don’t know of any because of Jared specifically,
0:40:50 but like Kanye West,
0:40:52 when he was making really hateful comments,
0:40:54 he lost a lot of sponsors.
0:40:56 I mean, Tiger Woods is another example
0:40:58 of when he crashed his car under the influence.
0:40:59 – What about Lance Armstrong?
0:41:01 How quickly was he cut loose?
0:41:02 – Oh, that’s a great example.
0:41:04 – Michael Vick, Oscar Pistorius.
0:41:05 I mean, it’s a pretty long list really
0:41:07 of celebrities who do terrible things.
0:41:11 Have you looked at other endorsers gone bad?
0:41:14 – No, I think if we can find another example
0:41:18 of where a person had such an incredible turnabout
0:41:22 in reputation and is so closely identified
0:41:26 with one single brand in the public mind,
0:41:27 then we’ll jump on it.
0:41:28 But a lot of these cases,
0:41:29 there’s just celebrities famous for something else
0:41:31 who’ve endorsed a hundred different things.
0:41:35 – So what about you, John?
0:41:38 If you had to be a brand spokesperson
0:41:41 for any company, any product, what would it be?
0:41:44 – Oh my God, well, you know,
0:41:46 I’d be happy to be the face of the Freakonomics podcast
0:41:48 from the Freakonomics Book Empire.
0:41:50 So keep me on speed dial.
0:41:56 – Huh, is that a risk I’m willing to take?
0:41:58 I mean, John Colley seems like a good guy,
0:42:01 but I don’t know, after what I learned today
0:42:05 about the science of celebrity endorsement,
0:42:06 I think it’s a pass.
0:42:09 But I do appreciate the offer, John.
0:42:10 I would also like to thank John
0:42:12 for the good conversation we had today
0:42:15 along with Zab Johnson and Al Roth.
0:42:17 I am curious to hear your views
0:42:18 about celebrity endorsement.
0:42:19 Send us an email.
0:42:22 We’re at radio@freakonomics.com.
0:42:25 Coming up next time on the show,
0:42:26 have you found yourself wondering
0:42:29 why these are the only two people
0:42:32 with a chance to become president of the United States?
0:42:33 – The question is– – The question is,
0:42:37 radical left– – Who is on your list, Joe?
0:42:41 – The true story of America’s political duopoly.
0:42:43 That’s next time on the show.
0:42:45 Until then, take care of yourself
0:42:47 and, if you can, someone else too.
0:42:51 Freakonomics Radio is produced by Stitcher and Renbud Radio.
0:42:55 You can find our entire archive on any podcast app.
0:42:56 It’s also at freakonomics.com
0:42:59 where we publish transcripts and show notes.
0:43:02 This episode was produced by Zach Lipinski.
0:43:05 Our staff also includes Alina Kullman, Augusta Chapman,
0:43:07 Dalvin Aboulagi, Eleanor Osborne,
0:43:09 Elsa Hernandez, Gabriel Roth,
0:43:11 Greg Rippin, Jasmine Klinger, Jeremy Johnston,
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0:43:20 Our theme song is “Mr. Fortune”
0:43:23 by the Hitchhiker’s “Our Composer” is “Louise Guerra.”
0:43:25 As always, thanks for listening.
0:43:29 – I once did an ad for Breone Suits.
0:43:36 – The Freakonomics Radio Network.
0:43:38 The hidden side of everything.
0:43:42 – Stitcher.
0:43:44 you
0:43:46 you
0:00:09 Imagine for a second that you work for a big consumer brand.
0:00:13 Maybe it’s sneakers or fast food or high-end wrist watches.
0:00:15 How do you persuade people that your product
0:00:17 is the one worth buying?
0:00:20 No matter how wonderful your sneakers or fast food
0:00:24 or watches may be, they are also inanimate objects.
0:00:26 They don’t have faces.
0:00:28 A watch has a face, but come on, you know what I mean.
0:00:31 So eventually, you may ask yourself,
0:00:36 what if I hired a well-known actor or comedian or athlete
0:00:40 to endorse my brand to put a face on it?
0:00:43 And now potential customers who may not have noticed
0:00:44 your brand are gonna be like,
0:00:48 ooh, if they like it, maybe I will too.
0:00:51 The practice of celebrity endorsement
0:00:52 has been around for a long time.
0:00:55 In the 1760s, the English pottery entrepreneur,
0:00:59 Josiah Wedgwood, created one of the first luxury brands
0:01:02 after receiving an endorsement from the Queen.
0:01:06 In ancient Greece, some of civilization’s earliest coins
0:01:10 had images of gods and goddesses, like Athena.
0:01:13 Who better to endorse a new product like money,
0:01:16 which you might otherwise be suspicious of?
0:01:20 But what happens if you attach a celebrity to your product
0:01:23 and that celebrity messes up?
0:01:30 – Police believe that O.J. Simpson is in that car.
0:01:32 We’ve received a report of a gun in the car.
0:01:34 The vehicle is registered to Al Kaling,
0:01:38 a former teammate, close friend of O.J. Simpson’s,
0:01:42 who has been a fugitive from justice now almost 12 hours.
0:01:46 – O.J. Simpson is just one example of many.
0:01:48 Today, on Freakonomics Radio,
0:01:51 a case study of another endorsement deal
0:01:53 that went terribly wrong.
0:01:54 – I mean, this is not just a mistake.
0:01:57 This is a crime, and this is something horrible.
0:01:59 – So what happens then?
0:02:02 We will try to answer that question starting now.
0:02:06 (upbeat music)
0:02:15 – This is Freakonomics Radio,
0:02:18 the podcast that explores the hidden side of everything
0:02:21 with your host, Stephen Dubner.
0:02:23 (upbeat music)
0:02:33 – John Cawley is a professor at Cornell University.
0:02:34 – So I’m a health economist,
0:02:36 and I’m really interested in the economics
0:02:37 of risky health behaviors,
0:02:40 in particular diet, physical activity, and obesity.
0:02:42 – Cawley is especially interested in how health behaviors
0:02:45 can be affected by government policy
0:02:48 and other top-down solutions.
0:02:51 The short answer is not very much.
0:02:54 In recent decades, we have heard a lot about nudges
0:02:57 and tweaks and incentives that are designed
0:03:01 to help people eat better, exercise more, et cetera,
0:03:03 but most of the policies that John Cawley
0:03:07 and his colleagues have analyzed just don’t move the needle.
0:03:09 There was one mild exception.
0:03:11 – One thing that we did find worked
0:03:13 is we conducted an RCT randomized experiment
0:03:17 of putting calorie labels on restaurant menus.
0:03:21 The data here came from Starbucks and Dunkin Donuts.
0:03:24 – And what we found is the getting the menu with the calories
0:03:27 did lead people to ordering 3% fewer calories.
0:03:28 So it’s not gigantic.
0:03:30 It’s not single-handedly gonna reverse the obesity epidemic,
0:03:33 but it’s a cheap policy that had a demonstrable result.
0:03:36 – And this got Cawley to wondering what else he could learn
0:03:39 by looking at data from restaurant chains.
0:03:41 – And so starting from that and thinking about like,
0:03:44 well, when would there be cases where people would be
0:03:45 potentially attracted to or deterred
0:03:48 from patronizing specific restaurant chains?
0:03:50 The realization of, oh my gosh, that Jared Fogle scandal
0:03:53 that occurred at Subway is definitely something to look at.
0:03:57 – Do you remember where you were and/or what you felt
0:04:01 when you first heard the news about the Jared Fogle scandal?
0:04:02 – Definitely don’t remember where I was,
0:04:06 but I mean, revulsion, definitely,
0:04:10 and kind of horror that someone who’d been going to schools
0:04:12 and holding up his big pair of pants,
0:04:14 trying to be like a role model,
0:04:18 would use his money and fame to do such horrible things.
0:04:19 This jumped out immediately as something
0:04:23 that had the potential to really move demand.
0:04:26 – Okay, let’s back up and fill in some gaps
0:04:28 in case you don’t remember or never even heard about
0:04:31 the scandal with Jared Fogle and Subway.
0:04:34 Let’s start with what is Subway?
0:04:36 – So Subway’s a fast food chain, it makes sandwiches,
0:04:38 they make it to order.
0:04:42 – Subway started in 1965 as a single sandwich shop
0:04:43 in Bridgeport, Connecticut.
0:04:47 It was owned by two families, the DeLuca’s and the Bucks,
0:04:50 under the same family ownership, Subway grew and grew
0:04:55 and grew to more than 35,000 stores across 100 countries.
0:04:59 In 2023, the original owners sold Subway
0:05:02 to a private equity firm called Rourke Capital
0:05:05 for about $9.6 billion.
0:05:08 Rourke also owns chains like Duncan, Arby’s,
0:05:10 Jimmy John’s and more.
0:05:14 So that’s Subway and who is Jared Fogle?
0:05:17 – The Jared Fogle story begins in the late 1990s
0:05:19 when he’s an undergraduate in college.
0:05:22 – This was at Indiana University in Bloomington.
0:05:25 – He weighed 425 pounds early in his college career
0:05:27 and wanted to make a big change.
0:05:31 So he began eating at Subway twice a day.
0:05:33 So what he said is I’ll have a six inch turkey sub
0:05:36 for lunch and a foot long veggie sub for dinner.
0:05:38 No condiments, no cheese on either one,
0:05:42 baked chips and a diet soda with each.
0:05:43 And I’m just gonna walk a lot.
0:05:45 He lost 245 pounds.
0:05:48 Someone who knew him as a freshman ran into him
0:05:50 when he was an upperclassman and was just shocked
0:05:52 and asked, “Well, how did this happen?”
0:05:54 Jared told the story and the guy said,
0:05:55 “I’m gonna tell somebody at the school newspaper.”
0:05:58 So the school newspaper did a story on Jared Fogle.
0:06:00 It then got picked up by Men’s Health Magazine
0:06:02 for a special they were doing on stupid diets
0:06:04 that actually work.
0:06:07 And so both the school newspaper clipping
0:06:10 and the Men’s Health article were seen by franchisees
0:06:13 of Subway who clipped it and sent it to headquarters
0:06:15 and said, “This seems like something we could use.”
0:06:19 They reached out to Jared and on January 1st, 2000,
0:06:21 they aired the first Jared Fogle commercial
0:06:25 where he explained that Subway is the healthy fast food
0:06:27 and that he lost 245 pounds
0:06:29 by eating Subway twice a day and walking.
0:06:30 (upbeat music)
0:06:31 – Here is Jared Fogle.
0:06:34 You may have seen him on the news or a talk show.
0:06:38 He was inspired by Subway’s great tasting sandwiches.
0:06:39 – Later commercials would often show him
0:06:42 with his pair of pants from when he weighed his heaviest
0:06:45 to illustrate the dramatic change in weight loss.
0:06:47 – Remember Jared from Subway?
0:06:49 He’s inspired a lot of people.
0:06:54 ♪ He’s looking good to show you the way ♪
0:07:00 ♪ His name is Jared and he’ll lead you to Subway ♪
0:07:04 – They shot about 300 television spots with him
0:07:07 and he also made a large number of personal appearances.
0:07:09 (upbeat music)
0:07:12 – And so it was that Jared Fogle over the course of a decade
0:07:16 became one of the most prominent celebrity endorsers
0:07:17 of his generation.
0:07:19 Although his case was special,
0:07:23 it was the endorsements that made him a celebrity.
0:07:26 There was something radically appealing, even sweet
0:07:29 about this combination of authenticity and fame.
0:07:32 Jared seemed to unlock something wild
0:07:35 in the culture of sandwich buying.
0:07:37 Between 1998 and 2011,
0:07:40 Subway went on a tremendous growth spurt.
0:07:42 Its overall revenues tripled.
0:07:46 Subway’s chief marketing officer, a man named Tony Pace,
0:07:49 said that between 1/3 and 1/2 of Subway’s growth
0:07:52 was due to the Jared Fogle campaign.
0:07:57 Pace, who later died in a snowmobile accident,
0:08:02 said that Jared Fogle was “woven into the fabric of the brand.”
0:08:04 The influential trade publication
0:08:07 Nations Restaurant News agreed.
0:08:08 – They said the Jared campaign is one
0:08:11 of the most successful restaurant campaigns ever.
0:08:13 – Now, you told us his story,
0:08:17 which was that he was eating a six inch sub for lunch every day,
0:08:20 a foot long vegetable sub for dinner.
0:08:22 You know a little bit about calories
0:08:27 and about caloric intake versus exercise as well.
0:08:30 When you heard that story for the first time,
0:08:35 that he weighed 425 pounds and lost 245 in a year,
0:08:39 primarily attributed to what he was eating,
0:08:41 what was your first thought of that claim?
0:08:43 – My first thought is he’s probably walking a lot,
0:08:46 but the other assumption is probably previously
0:08:48 he was consuming an awful lot of calories.
0:08:51 Sticking to this menu very likely could represent
0:08:53 a major reduction in calorie intake.
0:08:54 – Do we know what he was eating
0:08:57 and how much he was eating before the Subway diet?
0:08:58 – I’ve never heard that.
0:09:01 I mean, it could have been 18 cheeseburgers a day.
0:09:01 – Yeah.
0:09:04 – So Subway is booming.
0:09:07 Subway believes and the restaurant industry believes
0:09:10 that it’s booming in some substantial part
0:09:12 because of this guy named Jared Fogel.
0:09:14 And then what happens?
0:09:16 – Yeah, so in July of 2015,
0:09:19 the FBI raided Jared Fogel’s house.
0:09:22 – Investigators descend before Don
0:09:25 on the Indiana home of longtime subway spokesman,
0:09:27 Jared Fogel.
0:09:30 What makes the raid on Jared’s home particularly disturbing
0:09:32 is that it comes nearly two months
0:09:34 after the former executive director
0:09:36 of his nonprofit foundation was arrested
0:09:40 on federal child pornography charges.
0:09:42 – Jared, when he became relatively wealthy
0:09:45 from his income from Subway,
0:09:46 he set up a charitable foundation
0:09:49 and he hired someone to run it.
0:09:51 The charitable foundation wasn’t really doing anything.
0:09:53 It was a way to pay the guy who was heading it up
0:09:55 and what the guy was doing in exchange for the money was,
0:09:57 and I apologize, this is gruesome,
0:10:00 he was installing hidden cameras in his own house
0:10:02 and filming his own children naked.
0:10:04 And then also like children of his relatives,
0:10:06 children of his friends who were over,
0:10:08 and then he was sending them to Jared.
0:10:10 And Jared would be emailing back and commenting
0:10:14 and asking for more and sharing what he’d like to do.
0:10:18 So the FBI got wise to the foundation head,
0:10:20 raided his house, seized his hard drive,
0:10:22 found the images and found the communications with Jared
0:10:24 and they raided Jared’s house.
0:10:27 And that was when it just was all over the headlines
0:10:30 that Jared Fogle had been arrested for child porn.
0:10:32 It came out too that he had crossed state lines
0:10:33 to have sex with underage girls.
0:10:36 He had actually solicited prostitutes saying,
0:10:39 “I want you to get me a young girl, the younger the better.”
0:10:41 And so it was really reprehensible stuff.
0:10:43 The sentencing judge said that it was extreme
0:10:45 and it’s perversion.
0:10:47 So it was just really, really horrible events.
0:10:52 And industry observers said this is really bad news
0:10:54 for Subway because they said things like,
0:10:57 “From now on, when you see a Subway ad,
0:10:58 you’re going to be thinking of Jared
0:10:59 and what he did to those girls.”
0:11:02 (upbeat music)
0:11:05 – So how did Subway respond to the scandal?
0:11:07 Think about how you might respond
0:11:10 if your company’s superstar spokesperson
0:11:13 was found to have used the money you paid him
0:11:17 to set up a fake foundation that fed him child pornography.
0:11:21 Subway had long been famous for being publicity shy.
0:11:23 Their top executives rarely gave interviews
0:11:25 or even appeared in public.
0:11:28 And the response to this scandal was predictably muted.
0:11:30 On the day that Fogel was arrested,
0:11:33 they published a post that said Subway and Jared Fogel
0:11:36 have mutually agreed to suspend their relationship
0:11:38 due to the current investigation.
0:11:40 They also scrubbed all mention of Fogel
0:11:42 from their social media accounts.
0:11:45 In August, 2015, Fogel pleaded guilty
0:11:47 to child pornography trafficking
0:11:49 and sexual conduct with minors.
0:11:52 He is now serving a 15 year sentence.
0:11:53 The scandal happened
0:11:56 under the old family ownership of Subway.
0:11:59 We reached out to the current owners, Rourke Capital.
0:12:00 They sent a statement that reads,
0:12:02 our thoughts continue to go out
0:12:05 to all of those who were victimized by Mr. Fogel.
0:12:07 When we learned of Mr. Fogel’s behavior,
0:12:08 we took immediate action
0:12:10 and he has not been associated with the company
0:12:13 in any way since his arrest.
0:12:15 But can a company just say,
0:12:18 hey, stop paying attention to this person
0:12:20 that we’ve been begging you to pay attention to?
0:12:24 That’s what John Coley wanted to know.
0:12:26 As he considered how to answer this question,
0:12:29 he turned to some influential economic research
0:12:32 on the notion of repugnance.
0:12:34 – So Al Roth, who’s a Nobel Prize winning economist,
0:12:38 wrote an article about how repugnance or visceral disgust
0:12:40 can be something that affects market transactions
0:12:42 just as much as prices.
0:12:45 He gives examples of how things are outlawed
0:12:46 like the consumption of horse meat
0:12:50 or selling a kidney or paid sex work.
0:12:52 And people just find them offensive
0:12:54 and want them to not happen.
0:12:56 And so it really wouldn’t be surprising
0:12:58 if people, when they see a subway,
0:13:00 remember the headline they just saw,
0:13:02 the CNN story they just saw
0:13:04 about these reprehensible crimes.
0:13:07 – When I think of repugnance,
0:13:10 I think of transactions that some people want to engage in
0:13:13 and other people don’t think they should be allowed to,
0:13:15 normally for moral reasons.
0:13:18 And that is Al Roth himself, he teaches at Stanford.
0:13:22 He points out that repugnance doesn’t always affect markets
0:13:23 the way you might think.
0:13:25 – I find it very hard to predict.
0:13:26 And one reason it’s hard to predict
0:13:28 is it’s different in different places.
0:13:30 Disgust is easy to predict.
0:13:33 If someone spits into your coffee,
0:13:34 you won’t finish your coffee,
0:13:36 no matter where in the world you are.
0:13:40 But kidney exchange, surrogacy, prostitution,
0:13:42 those are things that are repugnant in some places
0:13:43 and not in others.
0:13:46 Horse meat, you can order it in some places
0:13:47 and not in others.
0:13:48 – It’s also worth pointing out
0:13:51 that repugnance is a moving target.
0:13:53 It shifts over time.
0:13:55 Consider slaveholding.
0:13:58 Today, that is repugnant in most places.
0:14:01 In the past, it was the norm.
0:14:03 Or here’s an example of things changing
0:14:05 in the opposite direction, life insurance.
0:14:08 Not so long ago, it was considered repugnant
0:14:12 for someone to profit from the death of a loved one.
0:14:14 Today, life insurance is seen as something
0:14:16 you’d be foolish to do without.
0:14:18 Or at least that’s the story we’ve been told
0:14:20 by life insurance firms.
0:14:23 So how did Al Roth think the public would react
0:14:26 to the repugnant news about Jared Fogle?
0:14:28 – It seems like a plausible hypothesis
0:14:31 that if the spokesperson were really important
0:14:34 and then he turns out to be a terrible guy,
0:14:37 then you might change your mind in much the same way,
0:14:39 but not with exactly the same consequences
0:14:42 that you might associate your feelings
0:14:43 about Elon Musk and Tesla
0:14:46 and about Donald Trump and Trump hotels.
0:14:48 If you don’t like Elon Musk,
0:14:50 not buying a Tesla avoids giving him some of your money,
0:14:52 but not buying a subway sandwich
0:14:53 which you may have discovered you liked
0:14:57 because of this criminal guy doesn’t harm him at all.
0:15:00 It wasn’t that subway sandwiches approved
0:15:01 of molesting children.
0:15:04 They were as much a victim as the general public was.
0:15:06 – And John Cawley again.
0:15:08 – So this seemed to be a great opportunity to test for,
0:15:11 to what extent do people, even though, you know,
0:15:13 Jared had nothing to do with the quality of the food
0:15:17 or the management, people might just see that subway sign
0:15:19 and remember him and just turn away and go somewhere else.
0:15:23 – So what did Cawley find?
0:15:25 That’s coming up after the break.
0:15:27 I’m Stephen Dubner and this is Freakonomics Radio.
0:15:40 – The Cornell health economist, John Cawley,
0:15:43 recently teamed up with five co-authors on a research paper.
0:15:47 The co-authors are Julia Edel-Battel, Scott Cunningham,
0:15:50 Matt Eisenberg, Alan Matthews and Rosemary Avery.
0:15:54 The paper is called “The Role of Repugnance in Markets,”
0:15:59 how the Jared Fogel scandal affected patronage of subway.
0:16:01 And what did they wanna do with this paper?
0:16:04 – What we wanna do is estimate what was the impact
0:16:07 of the Jared Fogel scandal on patronage of subway.
0:16:08 You can’t just go look at a stock price
0:16:10 to see how investors responded
0:16:11 because it’s a privately held company.
0:16:13 There is no publicly traded stock.
0:16:15 You can’t look at quarterly earnings reports
0:16:16 because there aren’t any.
0:16:18 And also you don’t wanna just rely
0:16:20 on whatever executives of the company say
0:16:22 because you can’t independently verify it.
0:16:24 – So what did you do instead?
0:16:26 – So what we did is we went to a dataset
0:16:29 called the Simmons National Consumer Survey.
0:16:32 They survey a large number of people nationwide
0:16:34 and they ask them really detailed questions
0:16:37 about the stores, the companies they patronize.
0:16:39 And in particular, they ask about their patronage
0:16:42 of 58 different restaurants in the past 30 days.
0:16:44 They conduct it four times a year.
0:16:46 So that allows us to look at changes
0:16:48 in relatively short periods of time
0:16:52 in the restaurants that people say they’re visiting.
0:16:53 – And these data go back how far?
0:16:57 – We’re looking at from January 1st, 2014
0:16:59 until December 31st of 2016.
0:17:01 So we’re looking over a three year period,
0:17:03 the middle of which is the information shock.
0:17:08 Information shock is economists speak for, in this case,
0:17:11 the burst of news that accompanied the revelation
0:17:14 of Jared Fogle’s child pornography crimes.
0:17:17 – One thing that makes the event we’re studying
0:17:21 suitable for study is that nobody knew
0:17:22 the bad stuff about Jared.
0:17:26 Nobody knew that until the FBI raided his house.
0:17:27 And as soon as they raided his house,
0:17:29 it was front page news all over America.
0:17:31 And it was confirmed shortly thereafter
0:17:32 through a guilty plea.
0:17:34 Most of the time with an ad campaign,
0:17:37 it’s hard to measure how much people have been exposed to.
0:17:39 But this is a case where really nobody knew anything
0:17:42 until one day like everybody knew everything.
0:17:44 – John, I have a question that is personal,
0:17:46 perhaps a bit intrusive.
0:17:48 So feel free to take a pass if you’d prefer.
0:17:50 But I once heard you give an interview,
0:17:54 were you discussed a troubling incident in high school
0:17:56 with your debate coach?
0:17:59 And I was really taken with your response to it,
0:18:04 which was to get through it, but then come back
0:18:06 and to get justice not only at your own school,
0:18:08 but then at the next school where the guy went to.
0:18:12 And I was really curious if that experience
0:18:14 at all informed the way that you approached
0:18:17 this topic with Jared Fogle in Subway.
0:18:20 – Yeah, so the background is I had a high school debate coach
0:18:23 who molested me and he molested other people.
0:18:26 It wasn’t really until college that I was reckoning with it.
0:18:28 And then wrote a letter to the school principal
0:18:29 and got him fired.
0:18:31 He moved to another high school in town.
0:18:33 I went to the people who knew the administration
0:18:36 of that high school and got him fired from there.
0:18:38 And I went to the police and explained what happened,
0:18:40 but he never went to jail.
0:18:43 It does make me think that we,
0:18:46 it’s this kind of issue is worthy of study.
0:18:49 And there’s lots of different ways you can contribute
0:18:49 to that.
0:18:51 And this is a small way that I’m contributing
0:18:53 to better understand what people think
0:18:56 and what they do when they learn information
0:18:58 like what Jared Fogle did.
0:19:00 – It did make me wonder if your personal experience
0:19:03 contributed to your assessment of what you thought
0:19:07 would happen with Subway after the Fogle scandal.
0:19:10 – Another thing that you’re making me think about
0:19:12 is the distinction between being an objective researcher
0:19:14 and letting the data speak for themselves
0:19:16 and fairly and honestly reporting what you find.
0:19:18 The difference between that and the way you wish
0:19:20 things worked in the world.
0:19:21 I would hope.
0:19:24 And I think there was like universal disgust and anger
0:19:27 at this person who betrayed so many people’s trust.
0:19:29 That doesn’t mean Subway has to experience lower sales
0:19:30 because of it though.
0:19:36 – So did Subway experience lower sales?
0:19:38 Kauley and his colleagues did have data
0:19:40 from the Simmons marketing survey.
0:19:43 By the way, that’s the same data source that Kauley used
0:19:45 on his study about posting calorie counts
0:19:47 on a restaurant menu.
0:19:49 To get at the Jared Fogle effect,
0:19:51 Kauley would need to measure the Simmons data
0:19:56 against a control variable, a different fast food restaurant.
0:19:58 This required the use of what researchers
0:20:00 call synthetic control.
0:20:04 – Rather than us saying, well, here’s what we think
0:20:07 is a good comparison or control firm for Subway
0:20:11 and guessing like DeBella’s or Firehouse Subs
0:20:13 because they’re sandwich companies.
0:20:15 We can instead use the method of synthetic control
0:20:18 and that will go and find the optimal firms
0:20:22 that best resembles Subway prior to this shock.
0:20:25 In this case, interestingly, it picked just three.
0:20:28 It was McDonald’s, Whataburger and Jack in the Box.
0:20:30 So all three coincidentally just turned out
0:20:31 to be burger chains.
0:20:33 It didn’t pick any sandwich chains.
0:20:36 – I’m sorry, back up the control or the metrics
0:20:39 on which they aligned with Subway were what though?
0:20:40 – Great question.
0:20:42 – Is it population metrics?
0:20:44 – What we want is a synthetic, a fake Subway
0:20:46 that’s as similar to Subway before the shock,
0:20:48 but then the question is similar in terms of what?
0:20:51 The standard answer is lagged values
0:20:53 of the dependent variable or in our case, patronage.
0:20:56 That it has similar trends in patronage prior to the shock,
0:20:59 but we also matched it on demographics
0:21:00 of people who patronize it.
0:21:04 So the percent who are women, low income, low education.
0:21:05 – So these are what you might call
0:21:09 observationally equivalent customer populations, yes?
0:21:11 – Yep, chains with similar demographics
0:21:12 among their patrons and similar levels
0:21:14 of trends in patronage.
0:21:17 And the funny thing is like that’s the feature, not the bug.
0:21:21 It doesn’t depend on us using deduction or logic
0:21:22 to guess what’s the best control.
0:21:25 It lets the data speak for itself.
0:21:26 – Okay, so you start working with the data.
0:21:28 Tell me what happens next.
0:21:30 – Yep, we now have a synthetic Subway
0:21:31 that we can compare to regular Subway.
0:21:33 And what we look to see is,
0:21:37 does the real Subway become significantly different
0:21:40 from the synthetic Subway after the shock?
0:21:42 – And what were you expecting, John?
0:21:43 – I mean, I expected, yes,
0:21:46 that people would not want to go to Subway as often
0:21:48 or as much in the wake of this information.
0:21:51 – And what magnitude of a drop were you thinking?
0:21:54 – I wouldn’t have been surprised by 5% to 10% drop
0:21:56 in patronage that eventually went away.
0:21:58 Like maybe it goes away in six months.
0:22:02 And we really find that patronage remained flat.
0:22:05 There’s no significant change in patronage.
0:22:07 – Can you just summarize this in lay terms?
0:22:11 Like a sandwich chain has an everyday endorser
0:22:14 who turns out to be very, very popular.
0:22:17 He becomes almost the face of the franchise.
0:22:20 He pleads guilty ultimately to sex crimes
0:22:24 and child abuse, and nothing happens to the product.
0:22:27 I mean, it just sounds, it sounds hard to believe.
0:22:29 Did you have a hard time believing it?
0:22:31 – Well, I mean, there are these two,
0:22:32 like decision making systems.
0:22:34 So there’s system one, which is fast and emotional
0:22:35 and may involve repugnance.
0:22:37 And then there’s system two, which is more rational
0:22:39 and slower to react.
0:22:42 I’m certain when people saw the news that they were revolted
0:22:45 and they were disgusted and experienced repugnance.
0:22:48 But when it came time to choose where to go to eat,
0:22:51 they apparently used system two and thought like,
0:22:52 well, it’s got nothing to do with the food.
0:22:54 It’s got nothing to do with the company
0:22:58 because we’re not finding any effect of this scandal
0:22:59 on people’s probability of going.
0:23:03 – Is it possible that this evidence just shows
0:23:04 that our personal preferences,
0:23:07 including like what I want to put it in my mouth today
0:23:11 are just much stronger a driver than our sense of,
0:23:13 I don’t want to say morality or guilt,
0:23:17 but plainly a person who was affiliated with this brand
0:23:18 and did something horrible.
0:23:21 I would think that that would outweigh my decision
0:23:24 about what I want to eat for lunch today, but it doesn’t.
0:23:27 So what’s the takeaway in that regard for you?
0:23:30 – So you’re right, like people’s habits around food are strong.
0:23:32 It’s really hard to change people’s behavior.
0:23:34 We know that from a lot of different studies,
0:23:37 but there’s a lot of other research that does document
0:23:40 that people do respond to negative information about firms
0:23:42 when it’s relevant to the product.
0:23:46 For example, when there was adulterated infant formula
0:23:49 coming over from China that had killed several children
0:23:51 and hospitalized many others,
0:23:53 there was a significant decline in exports
0:23:56 of all dairy products from China for quite a while.
0:23:59 Or when British petroleum had the deep water horizon oil spill
0:24:01 and it turned out that it was due
0:24:04 to their lack of safety precautions in the US,
0:24:07 people decreased their purchases of BP gasoline.
0:24:10 – Another example you write about is sexual abuse
0:24:11 in the Catholic church.
0:24:13 And you write that it reduced membership
0:24:16 at least in the measured area by 3%,
0:24:18 which is a large number
0:24:20 when you’re dealing with something as big as the Catholic church,
0:24:23 but you were thinking that the Jared Fogel effect
0:24:26 would be two or three times larger than that.
0:24:28 Again, is this all because of the disconnect
0:24:32 between who the person was and what the product was?
0:24:35 – So this paper concerned the Boston Globe spotlight series
0:24:38 that exposed not just sexual abuse by Catholic priests,
0:24:42 but institutional protection of these priests
0:24:44 where the church administration knew
0:24:46 what these priests were doing and hid it
0:24:49 and moved them around to help them evade accountability.
0:24:54 And so it implicated not just numerous employees
0:24:55 of the firm, you could say,
0:24:57 but also the management in a very systematic way.
0:24:59 And so that may explain why
0:25:02 there was a much more dramatic reaction.
0:25:04 – So in the paper, you write that the absence
0:25:07 of a detectable impact of the Jared scandal
0:25:10 on patronage of Subway raises the question
0:25:12 of whether Subway may have been previously
0:25:15 overestimating the extent to which Jared was responsible
0:25:17 for their increased sales.
0:25:18 Say a little bit more about this,
0:25:20 and I’d love to hear you talk as much as you want
0:25:23 about how firms will often tell a story
0:25:27 that sounds believable, sounds appealing,
0:25:30 but is kind of free of empiricism.
0:25:33 – Yeah, so the fact that we can’t reject the null hypothesis
0:25:36 that this had no impact, like there’s no detectable impact
0:25:38 of this information on people’s purchases
0:25:40 or patronage of Subway does make you question,
0:25:42 well, wait a second, how could this be true
0:25:46 when we were told all along by insiders to the company,
0:25:48 by the restaurant industry,
0:25:50 that this was one of the most successful ad campaigns ever,
0:25:52 and he was the face of it.
0:25:55 It is possible that maybe he was incredibly influential
0:25:57 and these ads were really powerful
0:26:00 and moved demand early in the ad campaign,
0:26:03 but maybe by this point it had run its course.
0:26:05 And even though Subway was continuing to pay him,
0:26:07 it wasn’t really adding much.
0:26:09 But another possibility is that all along
0:26:12 the firm was overestimating
0:26:14 how much the ad campaign was contributing
0:26:15 to their bottom line.
0:26:17 – Well, I think that’s right.
0:26:20 I think that there’s an incentive for marketing directors
0:26:22 to tell their companies that they,
0:26:25 the marketing directors are having a great effect on sales.
0:26:27 – That again is Al Roth.
0:26:29 – And if what you’ve done is hired a spokesperson,
0:26:32 then you say the spokesperson has had a great effect on sales.
0:26:36 – We did a two-part series of Freakonomics Radio a while back
0:26:39 called Does Advertising Actually Work?
0:26:40 The short answer?
0:26:43 Not nearly as much as advertising
0:26:45 and marketing departments say.
0:26:48 One paper we cited in those episodes
0:26:50 is by the Berkeley economist Steve Tadellis
0:26:52 and two co-authors.
0:26:54 They used data from eBay.
0:26:56 Here’s Al Roth again.
0:26:59 – Apparently eBay used to buy ads on Google search
0:27:00 on the name eBay.
0:27:02 So if you searched for eBay,
0:27:05 you saw not just eBay’s website,
0:27:07 but you also saw an ad from eBay.
0:27:10 And what the marketing department at eBay
0:27:12 told the executive suite at eBay was,
0:27:15 we’re really effective at driving sales
0:27:18 because lots and lots of people who click on our ad
0:27:20 proceed to buy something on eBay.
0:27:23 And what Tadellis and his colleagues did as an experiment
0:27:24 was they said, you know,
0:27:26 a lot of people who click on the ad,
0:27:27 they were searching for eBay.
0:27:29 They were intending to buy something on eBay.
0:27:31 They just wanted to find the web address
0:27:32 so they could click on it.
0:27:34 And if we don’t advertise,
0:27:36 we’ll get just as much revenue
0:27:38 because instead of clicking on the ad,
0:27:39 they’ll click on the organic search result,
0:27:41 which will come up first.
0:27:43 So that was a case where there was a claim,
0:27:46 but no evidence that the ads were leading to the purchases.
0:27:49 And that could well be the case with the spokesperson.
0:27:52 – It may be that academic researchers
0:27:55 are suspicious of the power of advertising
0:27:57 and of spokespeople,
0:28:01 but most companies don’t seem to be suspicious at all.
0:28:03 Take a look at advertising during the Super Bowl,
0:28:07 which is easily the biggest annual TV event in the U.S.
0:28:10 and therefore the biggest annual advertising event.
0:28:11 Over the last four years,
0:28:15 between 60 and 75% of Super Bowl ads
0:28:17 featured at least one celebrity
0:28:19 and usually more than one.
0:28:23 So if you believe that celebrity endorsements do work,
0:28:26 the question is why?
0:28:31 After the break, it is time to cue your inner primate.
0:28:35 We want the things that high status individuals have.
0:28:36 – I’m Stephen Dubner.
0:28:37 This is Freakonomics Radio.
0:28:38 We’ll be right back.
0:28:44 (upbeat music)
0:28:48 Even though academic researchers are skeptical
0:28:50 of the power of celebrity endorsement,
0:28:52 the practice rolls on,
0:28:55 despite the significant cost to the firms.
0:28:58 LeBron James signed a lifetime deal with Nike
0:29:02 that could pay out an estimated $1 billion.
0:29:05 Taylor Swift has endorsed Diet Coke, Apple Music,
0:29:07 Keds, AT&T, CoverGirl,
0:29:09 and she reportedly almost reached an agreement
0:29:12 to endorse the cryptocurrency exchange FTX
0:29:15 for a reported $100 million.
0:29:19 And for nearly 20 years, starting in 1975,
0:29:21 Hertz Rental Cars ran what was considered
0:29:24 an exceptionally successful marketing campaign
0:29:27 featuring OJ Simpson dashing through airports
0:29:29 and wowing the spectators.
0:29:32 ♪ Go OJ, wow ♪
0:29:37 ♪ Gave you in, gave you out with super speed ♪
0:29:42 ♪ The superstar in Rental Cars ♪
0:29:44 – Hertz took Simpson off the air
0:29:46 once he was charged with murdering his ex-wife
0:29:47 and her friend.
0:29:49 At the time, he was being paid
0:29:51 more than half a million dollars a year.
0:29:54 – Celebrity endorsements are extremely expensive.
0:29:55 – And that is…
0:29:57 – Elizabeth Zab Johnson.
0:30:00 – I am the executive director and senior fellow
0:30:02 with the Wharton Neuroscience Initiative
0:30:04 at the University of Pennsylvania.
0:30:05 – Where does Zab come from?
0:30:09 – The middle three letters of Elizabeth.
0:30:11 There are many Elizabeth Johnson’s in the world,
0:30:14 but there is only one Zab Johnson.
0:30:16 – As far as you know.
0:30:17 – As far as I know, actually,
0:30:18 I know that there’s a second Zab Johnson
0:30:21 and she’s a developmental psychologist.
0:30:23 And I’m pretty sure she Googled her name
0:30:25 and found my nickname and liked it.
0:30:27 – Oh, no.
0:30:29 – But I’ve never called her out on it.
0:30:30 – You’re doing it right now.
0:30:31 – I am.
0:30:35 – Johnson teaches in the marketing department at Penn
0:30:37 and she has studied celebrity endorsements.
0:30:41 As she was saying, they are expensive.
0:30:44 – And they are inherently risky
0:30:48 because you’re associating your brand with a person
0:30:52 that may have behaviors that don’t all match up
0:30:56 with your values and your idea of what the brand represents.
0:30:58 – So expensive and risky,
0:31:01 those are two pretty strong negative words.
0:31:04 And yet there is a multi-billion dollar industry
0:31:06 in celebrity endorsement.
0:31:10 So who is not buying what you are selling and why not?
0:31:13 Why do so many people proceed with it despite those risks?
0:31:17 – Social hierarchy and social status matter to us
0:31:20 as humans and as primates.
0:31:24 And so we want the things that high status individuals have
0:31:29 we’re in a really fractured noisy advertising environment.
0:31:33 So you wanna create memorable content.
0:31:36 You wanna create things that people will go back to
0:31:37 and view again and again.
0:31:40 – But there are other ways to do all that without a celebrity.
0:31:44 Why is the celebrity the first choice?
0:31:47 – I think there’s some expectations around it.
0:31:49 You know, you’re not just watching the game.
0:31:50 You’re coming to watch the commercial.
0:31:51 Why are you watching the commercials?
0:31:53 ‘Cause you also wanna see the celebrities
0:31:55 and see what, you know, again,
0:31:58 that sort of driving that fundamental biological need
0:31:59 that we have.
0:32:00 – So I don’t know how closely, if at all,
0:32:03 you followed the breakup of Kanye West and Adidas.
0:32:06 They had this hugely successful partnership.
0:32:08 His Yeezy sneakers brought in something like $2 billion a year
0:32:11 roughly 10% of their revenue.
0:32:14 But he had always been a complicated partner, let’s say,
0:32:17 and his behavior got more erratic, more inappropriate,
0:32:20 including some very public anti-Semitism.
0:32:23 So Adidas finally broke things off with him,
0:32:26 but they had, I guess, millions of pairs of sneakers
0:32:28 already manufactured when they broke up.
0:32:30 I guess they could have just burned them or something,
0:32:33 but instead they decided to sell them
0:32:34 and donate the proceeds to charities.
0:32:37 What did you think of that solution?
0:32:40 – Their decision to release and sell,
0:32:44 but not make profits or be obligated to give Kanye
0:32:48 any of the revenue is probably a positive one.
0:32:52 Adidas realizes that right now consumers really need them
0:32:55 to espouse social values that resonate
0:33:00 with younger people and with the consumer at large.
0:33:03 So I think the idea of burning shoes
0:33:06 and creating environmental pollution
0:33:09 from that process as well as waste,
0:33:12 I think was probably too big of a burden for them.
0:33:14 So this was the right solution.
0:33:17 I think it’s a great solution, actually.
0:33:19 – On the other hand, you’re wearing
0:33:21 or at least owning the product of someone
0:33:23 who’s been disgraced, at least in the eyes of many, right?
0:33:27 – I mean, with every product that we consume,
0:33:29 there are always those things at play.
0:33:32 With shoewear in particular,
0:33:36 we know that those are mostly being manufactured
0:33:38 in environments that I don’t think we think
0:33:41 are the right manufacturing environments
0:33:42 for modern day consumers,
0:33:43 but at the same time,
0:33:47 we still will pay hundreds of dollars for them.
0:33:50 – I don’t know if you’ve ever visited Auschwitz,
0:33:54 but there are these collections of things
0:33:57 that were taken from the people who were sent there
0:33:59 and then usually killed there, most of them Jews,
0:34:02 but not all these gigantic piles of eyeglasses,
0:34:06 gigantic piles of suitcases and gigantic piles of shoes.
0:34:07 I wonder, do you think there might have been something
0:34:10 fruitful to do with those whatever million
0:34:12 or however many Yeezys there were,
0:34:14 some kind of public sculpture
0:34:16 that might have been a better solution
0:34:19 than going ahead and selling the thing
0:34:20 that was made by the person
0:34:23 that you are supposed to be distancing yourself from?
0:34:25 – That’s an interesting idea.
0:34:27 I mean, I think Adidas had to be really careful
0:34:31 because the founder had been part of the Nazi party
0:34:34 and it was a point of shame for the company.
0:34:36 There could have been a huge backlash
0:34:38 to something like that.
0:34:39 – A little bit too on the nose.
0:34:41 – Too on the nose, right?
0:34:45 And not at all the same, right?
0:34:46 – Not at all the same.
0:34:49 – So I think that this is probably the better move.
0:34:52 – I guess this is why I’m not in corporate marketing.
0:34:56 – And maybe better than sending Yeezys
0:35:00 to underprivileged children in developing nations
0:35:03 that could also be seen as being bad.
0:35:06 I think in a sense, maybe this was the right call.
0:35:12 And yet despite the risk of celebrity endorsements
0:35:16 and despite the expense, there are significant upsides.
0:35:18 That is a conclusion that Zab Johnson
0:35:20 and three co-authors reached.
0:35:21 In a recent study, they called
0:35:25 how celebrity status and gaze direction in ads
0:35:28 drive visual attention to shape consumer decisions.
0:35:32 – In this particular study, we used Snoop,
0:35:37 Scarlett Johansson, Michael Jordan, David Beckham.
0:35:39 They also used ads that didn’t have celebrities
0:35:41 in order to track the difference.
0:35:43 Some of the ads would show the celebrity
0:35:46 looking toward a snack food that they were endorsing.
0:35:51 – Cheezits, Nutrabars, Snickers Oreos.
0:35:54 – By tracking eye movements, Johnson could tell
0:35:58 whether research subjects followed the celebrity’s gaze
0:36:00 and looked at the product
0:36:03 or whether they were so fixated on the celebrity
0:36:05 that they ignored the product.
0:36:06 – In the psychology literature,
0:36:08 that’s called the vampire effect,
0:36:11 the celebrity overshadows the product.
0:36:15 If that’s true, then it’s not going to work, right?
0:36:17 That could be a really big disaster.
0:36:19 – Okay, so what effect did you find
0:36:21 when consumers look at a celebrity
0:36:23 who is looking at a product?
0:36:27 – So we found that even though people spend less time
0:36:30 looking at the product, it builds confidence
0:36:32 and surety around the product
0:36:35 just by being paired with a celebrity.
0:36:36 And that was enough to nudge people
0:36:39 to make choices of snack foods
0:36:41 that they had felt on the fence about
0:36:44 towards the one that had been presented with a celebrity.
0:36:48 – And could I take that finding and extrapolate from it
0:36:52 the idea that celebrity endorsement, quote, works?
0:36:54 – I mean, this was a single intervention.
0:36:56 This was the single presentation
0:36:58 of an advertisement for four seconds.
0:37:01 So if you think about how many times
0:37:03 we’re actually visually presented
0:37:04 with this kind of information
0:37:06 and that little bit of confidence,
0:37:10 if you can think about that as an aggregation over time,
0:37:13 it is probably going to be pretty successful.
0:37:14 That’s my take.
0:37:21 – Now, this was one small study by one neuroscientist.
0:37:23 The economist John Colley walked us through
0:37:26 some of the other literature on celebrity endorsements.
0:37:29 – Craig Garthwy and Northwestern’s done a neat paper
0:37:32 on the effect of an endorsement of your book
0:37:36 by Oprah’s book club and found that it led to a jump in sales
0:37:37 not just of the recommended book,
0:37:40 but also of other books written by that same author.
0:37:42 And interestingly, it didn’t increase book sales.
0:37:44 People didn’t buy any more books,
0:37:46 they just switched to buying the one Oprah recommended.
0:37:48 And then I guess Craig really is a fan of Oprah.
0:37:50 He wrote another paper about Oprah’s endorsement
0:37:52 of Senator Obama for president
0:37:55 and estimates the impact that that had on his votes
0:37:57 and contributions and voter turnout.
0:37:59 He estimates it got Senator Obama
0:38:00 an additional million votes.
0:38:02 – To be fair, Oprah is an outlier as well
0:38:03 because she’s so huge.
0:38:06 Additionally, with her book recommendations,
0:38:08 there’d never been anything like that
0:38:09 in the history of book recommendations,
0:38:10 at least in modern history.
0:38:12 And it wasn’t just an endorsement,
0:38:15 it was a call to action to everybody go buy this book.
0:38:19 What do we know about the more general state of endorsement?
0:38:22 Let’s say the Bron James is endorsing Nike.
0:38:26 What do we know about the power of that type of endorsement
0:38:27 where there’s some affiliation,
0:38:30 but not necessarily a call to action?
0:38:31 – It’s a great question.
0:38:33 I don’t have a good answer for you.
0:38:35 The discussion that you had in your earlier episodes
0:38:37 about does advertising really work?
0:38:40 The work of Anna Tuckman finds very little increase
0:38:43 in sales of e-cigarettes due to TV advertising.
0:38:46 The work of Steve Tadellis finds a negligible return
0:38:48 to paid search ads for eBay.
0:38:52 Brett Gordon has found that firms rule of thumb
0:38:55 for guesstimating the payoff to ads
0:38:58 often vastly overstates what the true payoff actually is.
0:39:01 There were explanations in that series
0:39:02 that we did one of which came from Steve Levitt,
0:39:04 which is the people responsible
0:39:07 for soliciting the budget for marketing and advertising
0:39:09 are the same people responsible for measuring
0:39:11 and making claims about the efficacy.
0:39:13 Is that the best explanation
0:39:15 for why there can be a gap between the two?
0:39:17 – I think it’s one possible explanation.
0:39:19 I also think of public health.
0:39:21 So a lot of the work I do is in health economics
0:39:24 and very often people in public health
0:39:25 will be very well-intentioned
0:39:28 and will propose some intervention
0:39:30 and they claim we’re seeing amazing results
0:39:31 in pilot studies.
0:39:34 There’s a sense of like, aren’t good intentions enough?
0:39:36 And I could imagine something being similar
0:39:38 with marketing of like, how couldn’t this work?
0:39:41 This is what generations of ad people have done.
0:39:43 But again, this is how science progresses.
0:39:45 This is how we make sure we’re not wasting resources
0:39:48 is we need to rigorously evaluate everything we’re doing.
0:39:54 – So is Jared Fogle a good story or example
0:39:59 about why it makes sense for firms like Geico
0:40:02 to use an animatronic or whatever clay gecko
0:40:03 for spokesperson?
0:40:06 I mean, anybody you hire potentially is risky.
0:40:07 – That’s a really good point.
0:40:09 I mean, another example is like universities
0:40:11 have gotten very careful
0:40:13 about naming any building after a living person.
0:40:14 So once someone is deceased
0:40:17 and you know everything that they’ve done pretty much,
0:40:18 then you can make that decision.
0:40:20 But you don’t wanna be on the hook if, you know,
0:40:24 there’s a lot of sackler wings of museums out there
0:40:26 that since the Oxycontin opioid scandal
0:40:28 that are probably causing a lot of regret.
0:40:29 – I’m curious when you look back,
0:40:34 were there other firms in the wake of the Jared Fogle scandal
0:40:37 who cut loose endorsers
0:40:41 that perhaps they may have been quietly worried about?
0:40:44 – Oh wow, that’s a good question.
0:40:49 I don’t know of any because of Jared specifically,
0:40:50 but like Kanye West,
0:40:52 when he was making really hateful comments,
0:40:54 he lost a lot of sponsors.
0:40:56 I mean, Tiger Woods is another example
0:40:58 of when he crashed his car under the influence.
0:40:59 – What about Lance Armstrong?
0:41:01 How quickly was he cut loose?
0:41:02 – Oh, that’s a great example.
0:41:04 – Michael Vick, Oscar Pistorius.
0:41:05 I mean, it’s a pretty long list really
0:41:07 of celebrities who do terrible things.
0:41:11 Have you looked at other endorsers gone bad?
0:41:14 – No, I think if we can find another example
0:41:18 of where a person had such an incredible turnabout
0:41:22 in reputation and is so closely identified
0:41:26 with one single brand in the public mind,
0:41:27 then we’ll jump on it.
0:41:28 But a lot of these cases,
0:41:29 there’s just celebrities famous for something else
0:41:31 who’ve endorsed a hundred different things.
0:41:35 – So what about you, John?
0:41:38 If you had to be a brand spokesperson
0:41:41 for any company, any product, what would it be?
0:41:44 – Oh my God, well, you know,
0:41:46 I’d be happy to be the face of the Freakonomics podcast
0:41:48 from the Freakonomics Book Empire.
0:41:50 So keep me on speed dial.
0:41:56 – Huh, is that a risk I’m willing to take?
0:41:58 I mean, John Colley seems like a good guy,
0:42:01 but I don’t know, after what I learned today
0:42:05 about the science of celebrity endorsement,
0:42:06 I think it’s a pass.
0:42:09 But I do appreciate the offer, John.
0:42:10 I would also like to thank John
0:42:12 for the good conversation we had today
0:42:15 along with Zab Johnson and Al Roth.
0:42:17 I am curious to hear your views
0:42:18 about celebrity endorsement.
0:42:19 Send us an email.
0:42:22 We’re at radio@freakonomics.com.
0:42:25 Coming up next time on the show,
0:42:26 have you found yourself wondering
0:42:29 why these are the only two people
0:42:32 with a chance to become president of the United States?
0:42:33 – The question is– – The question is,
0:42:37 radical left– – Who is on your list, Joe?
0:42:41 – The true story of America’s political duopoly.
0:42:43 That’s next time on the show.
0:42:45 Until then, take care of yourself
0:42:47 and, if you can, someone else too.
0:42:51 Freakonomics Radio is produced by Stitcher and Renbud Radio.
0:42:55 You can find our entire archive on any podcast app.
0:42:56 It’s also at freakonomics.com
0:42:59 where we publish transcripts and show notes.
0:43:02 This episode was produced by Zach Lipinski.
0:43:05 Our staff also includes Alina Kullman, Augusta Chapman,
0:43:07 Dalvin Aboulagi, Eleanor Osborne,
0:43:09 Elsa Hernandez, Gabriel Roth,
0:43:11 Greg Rippin, Jasmine Klinger, Jeremy Johnston,
0:43:13 Julie Canfer, Lyric Bowditch, Morgan Levy,
0:43:15 Neil Coruth, Rebecca Lee Douglas,
0:43:17 Sara Lilly, and Teo Jacobs.
0:43:20 Our theme song is “Mr. Fortune”
0:43:23 by the Hitchhiker’s “Our Composer” is “Louise Guerra.”
0:43:25 As always, thanks for listening.
0:43:29 – I once did an ad for Breone Suits.
0:43:36 – The Freakonomics Radio Network.
0:43:38 The hidden side of everything.
0:43:42 – Stitcher.
0:43:44 you
0:43:46 you
It’s hard to know whether the benefits of hiring a celebrity are worth the risk. We dig into one gruesome story of an endorsement gone wrong, and find a surprising result.
- SOURCES:
- John Cawley, professor of economics at Cornell University.
- Elizabeth (Zab) Johnson, executive director and senior fellow with the Wharton Neuroscience Initiative at the University of Pennsylvania.
- Alvin Roth, professor of economics at Stanford University.
- RESOURCES:
- “Kanye and Adidas: Money, Misconduct and the Price of Appeasement,” by Megan Twohey (The New York Times, 2023).
- “The Role of Repugnance in Markets: How the Jared Fogle Scandal Affected Patronage of Subway,” by John Cawley, Julia Eddelbuettel, Scott Cunningham, Matthew D. Eisenberg, Alan D. Mathios, and Rosemary J. Avery (NBER Working Paper, 2023).
- “How Celebrity Status and Gaze Direction in Ads Drive Visual Attention to Shape Consumer Decisions,” by Simone D’Ambrogio, Noah Werksman, Michael L. Platt, and Elizabeth Johnson (Psychology & Marketing, 2022).
- “Consumer Responses to Firms’ Voluntary Disclosure of Information: Evidence from Calorie Labeling by Starbucks,” by Rosemary Avery, John Cawley, Julia Eddelbuettel, Matthew D. Eisenberg, Charlie Mann, and Alan D. Mathios (NBER Working Paper, 2021).
- “Consumer Heterogeneity and Paid Search Effectiveness: A Large Scale Field Experiment,” by Thomas Blake, Chris Nosko, and Steven Tadelis (NBER Working Paper, 2014).
- “The Economics of Obesity,” by John Cawley (The Reporter, 2013).
- “Repugnance as a Constraint on Markets,” by Alvin Roth (Journal of Economic Perspectives, 2007).
- EXTRAS:
- “Does Advertising Actually Work? (Part 2: Digital),” by Freakonomics Radio (2020).
- “Does Advertising Actually Work? (Part 1: TV),” by Freakonomics Radio (2020).