Economic Sanctions, Public Opinion, and Consumer Behavior in Target Countries

• In Event: The Effectiveness (or Not) of Coercion

Abstract

How do economic sanctions affect public opinion and consumer behavior in target countries? Do negative sentiments created by the economic sanctions lead the public to purchase less of the products of the challenging country? We examine the case in which China imposed economic sanctions (boycott) on South Korea in opposition to South Korea’s deployment of Terminal High Altitude Area Defense (THAAD). Using the surveys conducted by Gallup Korea, we examine South Korea's public attitudes toward the policy at hand - THAAD deployment- before and after the sanction was imposed. We also collect a large volume of comments from the newspaper articles, which are further processed with a machine learning technique to analyze people’s sentiments toward China’s sanctions. To identify the effect of sanctions on behaviors of Korean consumers, we use differences-in-differences analyses, using a barcode-level monthly beer sales data. We find that despite the fact that China’s economic sanctions created a backlash effect in public opinion, whereby South Koreans increased their support for a policy that China opposed, sales of Chinese products did not change and even slightly increased during this period. This shows that the public does not act as they feel in response to sanctions. This study suggests that when studying the effectiveness of economic sanctions, we need to consider public behavior, not just public opinion in target countries.

Author

• Rena Sung, University of Pittsburgh