Dollar voting

Dollar voting is an analogy that has been used to refer to the impact of consumer choice on producers' actions through the flow of consumer payments to producers for their goods and services.

Overview

In some Principles of Economics textbooks of the mid-20th Century, the term was used to describe the process by which consumers' choices influence firms' production decisions. Products that consumers buy will tend to be produced in the future. Products that do not sell as well as expected will receive fewer productive resources in the future. Effectively, according to this analogy, consumers are voting for "winners" and "losers" with their purchases. This argument was used to explain and justify market allocations of goods and services under the catchphrase "consumer sovereignty".

Consumer boycotts have from time to time been proposed as a useful approach to change producers' behavior. The goals of selective boycotts, or dollar voting, have been diverse, and have included a desire to see decreased corporate revenues, removal of key executives, or reputational damage.^[1]

The modern idea of dollar voting can be traced back to its development by James Buchanan in Individual Choice in Voting and the Market. As a public choice theorist, Buchanan equated economic participation by the individual as a form of pure democracy.^[2] Also known as political consumerism, dollar voting’s history in the United States can be followed back to the American Revolution, when colonists boycotted several British products in protest of taxation without representation.^[3]

Dollar voting has been increasingly thought to be a useful tool in changing producers' behavior. If voters feel disenfranchised politically, they may turn to using their spending power to influence politics and the economy. Consumers aiming to use dollar voting ultimately hope to impact society’s values and use of resources.^[4]

Examples

H&M
In January 2018, an H&M ad featured a black child model wearing a green sweatshirt reading, “Coolest Monkey in the Jungle”.^[5] The image sparked outrage among black Americans, as the animal has historically been linked to racially charged imagery. In response, many black Americans threatened to take their business to other clothing retailers. Immediately, H&M appointed a Diversity Leader and issued a public apology for the ad.^[6] Additionally, it removed the garment from all of its stores. In the aftermath, H&M was left with almost 4 billion US dollars in unsold inventory, and profit at its lowest level in 16 years. However, some experts attribute these effects to an unusually cold winter in Europe.^[7]
Chick-fil-A
In the summer of 2012, Dan Cathy, the COO of Chick-fil-A, a Georgia-based fast food chain, openly commented on his support of the traditional Christian idea of the nuclear family. In a survey of over 1,900 brands, Chick-fil-A ranked at number 15 for the most polarizing, likely due to its statements on marriage and its religious orientation.^[8] However, despite this, the fried chicken chain has continued to do well, with 49 consecutive years of growth going by the PR debacle.^[9] Additionally, while these statements did alienate some of its consumer base, a large portion of its consumers were pleased with Cathy’s statements. The chain saw its sales grow 12 percent the year following the scandal.^[10]
Chick-fil-A has continued to expand into new markets, and opened its first store in Manhattan, a traditionally liberal metropolis, in 2015, to few protesters.^[11]
The NFL
The National Football League was also ranked on the aforementioned study, where it placed as the number 6 most polarizing brand for Americans.^[12] The NFL has a history of controversy, with recent examples such as concussion health and treatment for players, as well as off-field behavior of players. In August of 2017, Colin Kaepernick, a quarterback for the San Francisco 49ers, began sitting for the playing of the US National Anthem before games. When asked about his reasons for sitting during the anthem, Kaepernick cited injustices in the US, including police killings of unarmed citizens, as well as the mistreatment of returned US veterans.^[13]
In the wake of these controversies, the NFL has seen declining viewership since 2008, with television rankings sinking as well.^[14] While there are a myriad of factors, in 2018 a survey was released that showed the primary reason for the recent decline was due to disapproval of player’s sitting or kneeling during the anthem, with 50% of respondents citing this reason for their lack of viewership.^[15]
Ticket sales, however, were down by only 1% in the 2018 season based on the previous season. It is unclear whether consumer dissatisfaction with NFL controversies has made any large-scale impact on its earnings.^[16]

Criticisms

The idea of dollar voting has faced criticism for its class implications. In modern America, dollar voting is often seen being used by middle and upper middle class consumers who spend their money at local farmers markets, community agricultural programs, and the preparation of “slow food”.^[17] These purchases do not affect low-income producers and consumer in the food market.^[18] Moreover, dollar voting has been criticized as a form of conspicuous consumption for the well-off, serving more as a display of morality than of actual consumer preference.^[19]

Dollar voting has also been criticized for being a sort of consumer vigilantism, as while most economists and economic philosophers accept that consumers have a right to their personal moral choices in the market, large-scale movements to influence consumer spending could have potentially dangerous implications.^[20]

As more consumer activists find ways to use the power of their dollar, efforts at encouraging corporations and firms to act in environmentally friendly ways have become popular. However, it is unclear whether or not a firm that creates negative environmental externalities will legitimately change its method of production to satisfy such desires.^[21] It also has the potential to move citizens away from law making efforts that check unmitigated self interest in both firms and consumers, and instead shifts this responsibility almost completely over to the market.

See also

• Crowd funding
• Demonstrated preference
• Dispersed knowledge
• Ethical consumerism
• Other people's money
• Tax choice
• Consumer sovereignty
• Buycott.com

Notes