Prof. Michael HiscoxDepartment of Government

Harvard University

Just Supply Chain ConferenceStanford, May 16-17, 2008

Consumer Demand for Ethical Standards:

Field Experiments with Ethical Product Labeling

Will consumers pay extra for standards?

What do we know about consumer demand for standards?

Surveys: About 75% of consumers say that would pay more for products made with good labor standards

Sales: The US market for Fair Trade Certified goods has grown by almost 50% per year since 2001

Our field experiments to test consumer responses to ethical product labeling:

In-store experiments: label items/displays, alter prices

Using eBay: auction labeled/unlabeled items

Our eBay auctions

Coffee: created our own brand of fresh roasted beans; all Fair Trade certified

Polo Shirts: sourced shirts from Cutter & Buck’s SA8000 certified suppliers

Method: we sold labeled and unlabeled coffee and shirts in simultaneous auctions

eBay Auction Results

COFFEE AUCTION PAIRS (n=81)        

  Bid Prices:   Total Prices (incl. shipping):

  Fair Trade Control %Premium Fair Trade Control %Premium

Mean 10.45 8.87 24.79 % 19.04 17.74 8.64 %

Std 3.73 2.93   3.80 3.47  

eBay Auction Results

SHIRT AUCTION PAIRS (n=28)        

  Bid Prices:   Total Prices (incl. shipping):

  SA 8000 Control %Premium SA 8000 Control %Premium

Mean 13.17 12.17 47.36 % 17.76 16.76 13.28 %

Std 6.50 6.92   6.50 6.93  

eBay Auction Results

New research on the way …

In-store experiments with a leading grocery retailer:

Experiments with labels, product displays, and prices, in all their New England stores

Labels include retailer’s own-brand ethical label as well as Fair Trade Certified and Rainforest Alliance Certified

Online experiments and surveys:

Survey of all bidders in our eBay auctions to examine the socio-demographic predictors of ethical consumption

Online retail store with treatments (labels, prices, information) randomized across individual shoppers