How and When to Use the Political Cycle to Identify Advertising Effects

Moshary, Sarah; Shapiro, Bradley; Song, Jihong

doi:10.1287/mksc.2020.1258

Cited by 11 publications

(2 citation statements)

References 22 publications

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“…See, for example,Moshary et al (2020), which shows that the strength of the rst stage varies tremendously across product categories when using political advertising as an instrument for product advertising.…”

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confidence: 99%

Generalizable and Robust TV Advertising Effects

Shapiro

Hitsch

Tuchman

2020

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We provide generalizable and robust results on the causal sales effect of TV advertising for a large number of products in many categories. Such generalizable results provide a prior distribution that can improve the advertising decisions made by firms and the analysis and recommendations of policy makers. To provide generalizable results, we base our analysis on a large number of products and clearly lay out the research protocol used to select the products. We characterize the distribution of all estimates, irrespective of sign, size, or statistical significance. To ensure generalizability, we document the robustness of the estimates. First, we examine the sensitivity of the results to the assumptions made when constructing the data used in estimation. Second, we document whether the estimated effects are sensitive to the identification strategies that we use to claim causality based on observational data. Our results reveal substantially smaller advertising elasticities compared to the results documented in the extant literature, as well as a sizable percentage of statistically insignificant or negative estimates. Finally, we conduct an analysis of return on investment (ROI). While our results show that many brands perform better with their observed advertising than they would without advertising, we document considerable over-investment in advertising at the margin.

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confidence: 99%

Generalizable and Robust TV Advertising Effects

Shapiro

Hitsch

Tuchman

2020

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“…However, as noted inMoshary et al (2021) as well, for the variation in political advertising, the instruments could be weak, and one needs to use the appropriate methods and report weak instrument-robust confidence sets (see e.g.,Chaudhuri & Zivot, 2011;Andrews, 2017;Sun, 2018;Andrews et al, 2019).5 Focusing on disaster relief as a form of charitable giving is ideal because, similarly acute, unexpected information shocks that are exogenous to donors' ability to give rarely exist for other charitable causes (e.g., curing cancer, fighting poverty, etc). We also do not anticipate religious charitable organizations to provide a good testing ground because they may draw donations from a small set of individuals who regularly donate as they attend, say, church services, rather than donating based on need.…”

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confidence: 99%

Are Political and Charitable Giving Substitutes? Evidence from the United States

Yildirim,

Simonov,

Petrova

et al. 2024

Management Science

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Using microdata from the American Red Cross (ARC) and the Federal Election Commission (FEC) in two natural experiments, we provide evidence that political giving and charitable giving are substitutes. In the first natural experiment, we estimate the effects of a positive shock to charitable donations to the ARC: foreign natural disaster events. We find that although charitable donations to ARC increase by 34.9% in the six weeks following a disaster, political donations decline by 18.8% in the same period. Put differently, each 1% increase in the charitable giving to ARC is accompanied by a 0.53% drop in political donations. At the average county-week–level donations, the implied effect of a $1 increase in charitable giving is a $0.42 decline in political donations. In the second natural experiment, we estimate the effects of a positive shock to political giving: advertisements for political campaigns. Exploiting geographic discontinuities in advertising markets, we find that political advertisements increase political giving, whereas they decrease charitable donations to ARC. Our estimates imply that each 1% increase in the political giving is accompanied by a 0.59% drop in charitable donations to ARC. At the average county-week–level donations, the implied effect of a $1 increase in political giving is a $0.33 decline in charitable donations. The crowding-out elasticities suggest that political giving and charitable giving are relatively close substitutes. We provide a number of robustness checks, and we discuss potential causal mechanisms. This paper was accepted by Eric Anderson, marketing. Funding: P. Yildirim thanks the Dean’s Research Fund and the Mack Institute at the Wharton School as well as the Wharton Behavioral Laboratory for their financial support. M. Petrova thanks financial support from the Severo Ochoa Programme for Centres of Excellence in R&D (Barcelona School of Economics CEX2019-000915-S), funded by MCIN/AEI/10.13039/501100011033. Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2021.00845 .

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