The Perils of Private Provision of Public Goods
45 Pages Posted: 2 Mar 2020 Last revised: 6 Apr 2020
Date Written: January 31, 2020
After April 2018 protests, Starbucks enacted policies that anybody could sit in their stores and use the bathroom without making a purchase. Using anonymized cellphone location data, we estimate this led to a 7.0% decline in attendance at Starbucks locations relative to other nearby coffee shops. The effect is 84% larger near homeless shelters, and larger for Starbucks’ wealthier customers. Remaining Starbucks customers spent 4.1% less time per visit. Public urination citations decreased near Starbucks locations, but rates of other minor crimes were unchanged. This highlights the difficulties of companies providing public goods, as customers are crowded out by non-customers.
Keywords: Public Good, Socially Responsible Investment, ESG investment, Homeless, Starbucks, Location data
JEL Classification: A11, A13, C55, D02, D22, D61, D62, D63, D64, H23, G30, L21, I15, G34
Suggested Citation: Suggested Citation