Working Paper: NBER ID: w31857
Authors: Bocar A. Ba; Roman Rivera; Alexander Whitefield
Abstract: Given police abolitionism’s new visibility after the 2020 racial justice protests, we assess stakeholder beliefs on the protests’ stock impacts on police-affiliated firms. Experts generally underestimate the firms’ stock gains, except situated experts like community organizers and police experts, who link the market responses to reforms, not budget cuts. An experiment with nonexperts and finance professionals shows negatively skewed stock predictions among respondents lacking information on policing products and no effect of exposure to narratives about the protests on forecast alignment. National data show enduring support for police reform despite abolitionist advocacy and little understanding of the Defund movement’s objectives.
Keywords: racial justice; police reform; stock market; stakeholder beliefs; Black Lives Matter
JEL Codes: D83; D91; G10; J15
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| stakeholder beliefs about the market impacts of racial uprisings (F69) | stock forecasts for police-affiliated firms (G24) |
| lack of information about policing products (K42) | negatively skewed stock predictions (G17) |
| narrative information about police defunding (H77) | forecast accuracy (C53) |
| defund movement (H77) | support for police reform (J45) |
| defund movement (H77) | public preferences towards budget cuts (H61) |
| exposure to product information (L15) | more accurate predictions (C53) |
| arguments related to budget cuts and reduced trust in the police (H72) | misalignment with actual voter preferences regarding police funding (D72) |