The Role of Repugnance in Markets: How the Jared Fogle Scandal Affected Patronage of Subway

Working Paper: NBER ID: w31782

Authors: John Cawley; Julia Eddelbuettel; Scott Cunningham; Matthew D. Eisenberg; Alan D. Mathios; Rosemary J. Avery

Abstract: Economics has long studied how consumers respond to the disclosure of information about firms. We study a case in which the disclosed information is unrelated to the product or firm leadership, but which could still potentially affect consumer patronage through the mechanism of repugnance, as described in Roth (2007). The information in this case concerns the arrest of Jared Fogle, the advertising pitchman for the Subway sandwich franchise, who was arrested in 2015 on charges of sex with a minor and child pornography. We study how the disclosure of this information, which was widely covered in the media, affected patronage of Subway. We estimate synthetic control models using data from a large nationwide survey of consumers regarding the restaurants they patronize. Despite the close and long-standing association of Jared Fogle with Subway, and heavy publicity of his crimes, we consistently fail to detect any effect of the Jared Fogle scandal on the probability of visiting a Subway restaurant. These results contrast with past studies of negative information disclosure, which tend to find negative impacts on sales, revenue, or stock price of the relevant companies. The absence of an effect in this case suggests that repugnance did not drive demand, and that consumers largely separated the offenses of a symbol of the firm from the products of the firm.

Keywords: repugnance; consumer behavior; Jared Fogle; Subway; scandal; patronage

JEL Codes: D1; D22; D80; D83; I1; J1; K42; L2; L83; M2; M3; M5

Causal Claims

Cause	Effect
Jared Fogle scandal (Y60)	consumer behavior (repugnance hypothesis) (D18)
feelings of disgust (D91)	Subway patronage (L91)
consumer perceptions of Fogle's offenses (K42)	Subway patronage (L91)
Jared Fogle scandal (Y60)	Subway patronage (L91)