An Analysis of Consumer Response to Corruption: Italy's Calciopoli Scandal
| Date | 01 February 2016 |
| DOI | http://doi.org/10.1111/obes.12094 |
| Author | Babatunde Buraimo,Robert Simmons,Giuseppe Migali |
| Published date | 01 February 2016 |
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©2015 The Department of Economics, University of Oxford and JohnWiley & Sons Ltd.
OXFORD BULLETIN OF ECONOMICSAND STATISTICS, 78, 1 (2016) 0305–9049
doi: 10.1111/obes.12094
An Analysis of Consumer Response to Corruption:
Italy’s Calciopoli Scandal
Babatunde Buraimo†, Giuseppe Migali‡,§, and Robert Simmons¶
†Management School, University of Liverpool, Chatham Street, Liverpool, L69 7ZH, UK
(e-mail: b.buraimo@liverpool.ac.uk)
‡Department of Economics, Lancaster University Management School, Bailrigg Lancaster,
LA1 4YX, UK
§Dipartimento S.G.S.E.S., Universita’ Magna Graecia, Catanzaro, Italy
(e-mail: g.migali@lancaster.ac.uk)
¶Department of Economics, Lancaster University Management School, Bailrigg Lancaster,
LA1 4YX, UK (e-mail: r.simmons@lancaster.ac.uk)
Abstract
The Calciopoli episode affecting Italian football in the 2005–6 season serves as an
opportunity for an empirical investigation into consumer (fan) behavior,following league-
imposed punishments on clubs whose officials were found guilty of corrupt practices.
Using a difference-in-differences estimation method, we find that home attendances for
convicted teams fell by around 16%, relative to those clubs not subject to punishment.We
show further that the fall in attendances resulted in non-trivial gate revenue reductions.
Our results suggest that a sizeable number of fans of the punished clubs were subsequently
deterred from supporting their teams inside the stadium.
I. Introduction
The purpose of this paper is to identify, using a difference-in-difference methodology, a
possible consumer response to a specific episode of corruption. The literature on corruption
has hitherto focussed on the supply-side, examining incentivesand consequences of cor rupt
behaviour. This literature has not surprisingly covered the behaviour of Governments and
other public sector organizations such as the police, the judiciary and publicly owned
companies.The various chapters in edited volumes such as Jain (1998) and Rose-Ackerman
(2007) and survey articles such as Aidt (2003) tend to deal with issues of corrupt practices
performed by civil servants, public representatives and private company executives. This
emphasis on public sector corruption matches the definition of corruption provided by
Jain (2001), as an action in which the power of public office is used for personal gain in
a manner that contravenes the rules of the game. Examples of corrupt practices are bribes
to politicians to influence the award of tenders in public procurement.
JEL Classification numbers: L83, K42
Consumer response to corruption 23
Absent so far from the literature on economics of corruption is any study demonstrating
the impacts on consumers of revealed episodes of corruption. This important research
question is not covered at all in the edited volumes of Jain (1998) and Rose-Ackerman
(2007). It can be argued that products or services whose delivery has been revealed to be
subject to corrupt practices may be seen as tainted in the views of some consumers.
The principal reason for the absence of studies on consumer (or voter) response to
corrupt practices is surely a lack of data. The sports industry offers a setting where corrupt
episodes are accurately recorded, where punishments are administered by sports governing
bodies and where audience demand, in the form of gate attendance at sporting fixtures, is
observable and systematically recorded. The particular setting for our analysis is the top
division of Italian football, Serie A.
Our paper will identify, using the now-standard difference-in-difference estimator, an
adverse impact on consumer (fan) demand from a clear example of corrupt practices in pro-
fessional team sports: Italy’s Calciopoli scandal of 2006. In this scandal, officials employed
by five Italian clubs were found guilty of attempting to influence referee behaviour so as
to enhance the winning potential of their teams in particular League fixtures. Prominent in
these illegal dealings was one of Italy’s top clubs, Juventus, which has a tradition of large
support and high levels of success. The five guilty clubs were punished and some officials
were given jail sentences while others were banned from further involvement in football.
The key point of our identification strategy is the possibility to compare attendances of
punished clubs (our treatment group) and unpunished clubs (our control group) in the years
before and after Calciopoli.
It is worth stressing that Italian football is a severetest bed for identification of significant
consumer impacts from scandal. This is because the history of Italian football is littered
with episodes of match-fixing and corruption, not all of which can be stereotypically traced
to links with Italian organized crime. Foot (2007) documents the long trail of corruption in
Italian football. Given that corruption is actually a part of Italian football culture one might
expect Italian football fans to be reconciled to the existence of corruption even if they dislike
it. In such a context, one might expect to find no significant effect of the Calciopoli episode
on Italian club attendances. On the other hand, this episode was so widely publicized and
condemned that an adverse effect on attendances would appear to be plausible. We shall
offer substantial empirical evidence in support of economically and statistically significant
adverse effects of Calciopoli on club attendances. We also offer some partial evidence to
suggest that fans’ response to Calciopoli was driven by disillusionment rather than moral
disapproval.
Our paper proceeds as follows. Section II explains how the Calciopoli episode de-
veloped and demonstrates the punishments given to the guilty clubs. This section also
highlights the product market context for the Calciopoli scandal. Section III explains our
difference-in-differences estimation method. Section IV details our data set and our model
of consumer demand. Section V offers our empirical results and section VI concludes.
II. The Calciopoli scandal
Italian professional football is organized in two divisions, SerieA which has 20 teams and
Serie B which has 22 teams. At the end of each season, the three bottom teams are demoted
©2015 The Department of Economics, University of Oxford and JohnWiley & Sons Ltd
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