An Economic View of Corporate Social Impact


Hunt Allcott, Giovanni Montanari, and Brandon Joel Tan. Working Paper. “An Economic View of Corporate Social Impact”. NBER Summer Institute 2021


The growing discussions of impact investing and stakeholder capitalism have increased interest in measuring companies’ social impact, not just their profits. We conceptualize corporate social impact as the social welfare loss that would be caused by a firm’s exit in equilibrium. We then quantify the social impacts of 73 large firms in 12 industries. We field a new survey measuring people’s willingness to substitute away from the firms they buy from and work for. We use the survey data to estimate product market and labor market models and simulate counterfactual equilibria after a firm’s exit. A key result is that consumer surplus is the most important component of firms’ social impact, dwarfing profits (because they overwhelmingly accrue to wealthy people with low social marginal welfare weights), worker surplus, and externalities. Existing impact rating systems have little correlation with our economics-based metric.
Last updated on 07/27/2021