Policy feedback via economic behavior: A model and experimental analysis of consumption behavior

Abstract

AbstractThis article examines policy feedback via economic behavior in the mass public, with a focus on consumption behavior. Do public policies affect the consumption behavior of mass publics and subsequent policymaking processes and outcomes? If so, how? I introduce a policy feedback model of consumption behavior in the mass public. Within this model, I advance a theoretical argument on the consequences of targeted cash assistance policies (TCAPs) for consumer spending behavior and government provision of basic utilities in developing countries. Using a randomized field experiment in Mexico and pre–post analysis, I find that TCAPs boost consumer spending on private access to basic utilities in the short term and reduce government provision of basic utilities in the medium term. The study pushes policy feedback theorists to think beyond the arena of mass politics, and the findings have important implications for social policy and human development in developing countries.