When Do Firm Preferences Change? Evidence from Global Warming

• In Event: Political Economy of Climate Change

Abstract

How do firms learn about whether they win or lose from policies to reduce greenhouse gas emissions, and how does this translate into their political behavior? We apply the preference updating model from Gazmararian and Milner (2022) to argue that in response to climate shocks firms update their beliefs about how likely they are to be affected by future global warming. We use text analysis of corporate earnings calls to measure how companies become aware of climate change. Then, we analyze corporate lobbying behavior to test whether these updated beliefs translate into behavior. This study is part of a larger research agenda that marries economic climate assessment models with theories of politics to better understand how climate change will reshape politics.

Authors

• Alexander Foster Gazmararian, University of Michigan

• Helen V. Milner, Princeton University