Policy Feedback via Economic Behavior: A Model and Experimental Analysis of Consumption Behavior

by Gregory S. Schober

Policy feedback scholars have done extensive work to understand how public policies affect mass behavior (the feed) and subsequent policy outcomes (the back). Thus far, this literature has focused mainly on political behavior feeds. However, the impact of these policies extends beyond the realm of politics, influencing the economic behavior of individuals and, in turn, shaping future policy outcomes.

In my paper, I develop a policy feedback model of consumption behavior in mass publics. Illustrated in Figure 1, the model shows how policies influence consumption capacity and preferences, which in turn affect future policy decisions. For example, social assistance policies transfer resources to beneficiaries, thus altering their spending decisions and influencing government policy responses (see path A-C-F-H).

I use this theory to investigate how targeted cash assistance policies (TCAPs) influence not just the immediate consumption patterns but also the subsequent policies. To do this, I analyzed the effects of Progresa—a Mexican TCAP that aimed to reduce poverty—by utilizing data collected during a randomized field experiment. I performed downstream analysis on the data to estimate the effects of Progresa.

In the short term, Progresa positively influenced private consumption of basic utilities. When households received the cash transfers, they used them to purchase private access to drainage (via septic tanks). However, in the medium term, a startling shift occurred. In communities where Progresa was implemented and private access to drainage increased, the government began making less of an effort to maintain the public water system.

My work offers key insights into the complex relationship between short-term consumption changes and (unintended) medium-term policy outcomes. It emphasizes that while consumption effects did occur swiftly, leading to increased private access to drainage, the subsequent impact on government policy ultimately led to reductions in basic utility access.

An intriguing question arises when considering the medium-term results: are targeted cash assistance policies—which generally are administered at the national level—letting local governments off the hook in terms of basic utility provision? When program beneficiaries use cash transfers to invest in private access to basic utilities, they in turn may be disincentivizing local governments from investing in public utility systems.

The implications of this study reverberate across various domains of policy feedback research. It highlights the need to broaden the scope of policy feedback analysis beyond political spheres to include economic mechanisms. These findings prompt further exploration into how economic feeds could influence future political behavior and policy outcomes.

In conclusion, this research breaks new ground by unraveling the ripple effects of social assistance policies, shedding light on how they influence consumption patterns and government policies regarding basic utilities. Understanding these intricate dynamics between policy, consumption behavior, and subsequent governance decisions is crucial for designing effective, holistic policies that address poverty while ensuring sustained access to essential services for vulnerable populations.

You can read the original article in Policy Studies Journal at

Schober, Gregory S. 2023. “Policy feedback via economic behavior: A model and experimental analysis of consumption behavior.” Policy Studies Journal 51: 607–627. https://doi.org/10.1111/psj.12474.

About the Author

Gregory S. Schober is an Assistant Professor in the Rehabilitation Sciences Program at The University of Texas at El Paso. His research examines social policy, political and economic behavior, and health in developing countries and the United States.