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The value of environmental status signaling

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  • Delgado, Michael S.
  • Harriger, Jessica L.
  • Khanna, Neha

Abstract

How much are consumers willing to pay to signal their environmental consciousness? We identify the signaling value of an environmental public good by focusing on hybrid cars and exploiting the physical uniqueness of the Toyota Prius relative to hybrids that look identical to their non-hybrid counterparts. We deploy a quasi-experimental hedonic model to estimate this willingness to pay. We find that, controlling for observable and unobservable factors, the Prius commands an environmental signaling value of $587 or 4.5% of its value. Our research provides lessons for economists and policymakers, and contributes to the literature on identifying signaling values.

Suggested Citation

  • Delgado, Michael S. & Harriger, Jessica L. & Khanna, Neha, 2015. "The value of environmental status signaling," Ecological Economics, Elsevier, vol. 111(C), pages 1-11.
    • Handle: RePEc:eee:ecolec:v:111:y:2015:i:c:p:1-11
    DOI: 10.1016/j.ecolecon.2014.12.021
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    Cited by:

    1. Delgado, Michael S. & Khanna, Neha, 2015. "Voluntary Pollution Abatement and Regulation," Agricultural and Resource Economics Review, Cambridge University Press, vol. 44(1), pages 1-20, April.
    2. Eslami, Hossein & Krishnan, Trichy, 2023. "New sustainable product adoption: The role of economic and social factors," Energy Policy, Elsevier, vol. 183(C).
    3. Elena Druică & Rodica Ianole-Călin & Andreea-Ionela Puiu, 2023. "When Less Is More: Understanding the Adoption of a Minimalist Lifestyle Using the Theory of Planned Behavior," Mathematics, MDPI, vol. 11(3), pages 1-18, January.
    4. Rita Abdel Sater, 2021. "Essays on the application of behavioural insights to environmental policy [Essais sur l’application des connaissances comportementales aux politiques environnementales]," SciencePo Working papers tel-03450909, HAL.
    5. Babutsidze, Zakaria & Chai, Andreas, 2018. "Look at me Saving the Planet! The Imitation of Visible Green Behavior and its Impact on the Climate Value-Action Gap," Ecological Economics, Elsevier, vol. 146(C), pages 290-303.
    6. Saleem H. Ali, 2017. "The ecology of diamond sourcing: from mined to synthetic gems as a sustainable transition," Journal of Bioeconomics, Springer, vol. 19(1), pages 115-126, April.
    7. Vesely, Stepan & Klöckner, Christian A. & Carrus, Giuseppe & Chokrai, Parissa & Fritsche, Immo & Masson, Torsten & Panno, Angelo & Tiberio, Lorenza & Udall, Alina M., 2022. "Donations to renewable energy projects: The role of social norms and donor anonymity," Ecological Economics, Elsevier, vol. 193(C).
    8. Matheus Nardo & Jeremy S. Brooks & Sonja Klinsky & Charlie Wilson, 2017. "Social signals and sustainability: ambiguity about motivations can affect status perceptions of efficiency and curtailment behaviors," Environment Systems and Decisions, Springer, vol. 37(2), pages 184-197, June.
    9. Ho, Foo Nin & Wong, Jared & Brodowsky, Glen, 2023. "Does masstige offer the prestige of luxury without the social costs? Status and warmth perceptions from masstige and luxury signals," Journal of Business Research, Elsevier, vol. 155(PA).
    10. Friedrichsen, Jana, 2018. "Signals Sell: Product Lines when Consumers Differ Both in Taste for Quality and Image Concern," Rationality and Competition Discussion Paper Series 70, CRC TRR 190 Rationality and Competition.
    11. Dayana Zhappassova & Ben Gilbert & Linda Thunstrom, 2018. "Energy efficiency, green technology and the pain of paying," Working Papers 2018-03, Colorado School of Mines, Division of Economics and Business.
    12. Sun, Shanxia & Delgado, Michael S. & Khanna, Neha, 2019. "Hybrid vehicles, social signals and household driving: Implications for miles traveled and gasoline consumption," Energy Economics, Elsevier, vol. 84(C).
    13. Megan E. Waldrop & Jill J. McCluskey & Ron C. Mittelhammer, 2017. "Products with multiple certifications: insights from the US wine market," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 44(4), pages 658-682.
    14. Brooks, Jeremy S. & Wilson, Charlie, 2015. "The influence of contextual cues on the perceived status of consumption-reducing behavior," Ecological Economics, Elsevier, vol. 117(C), pages 108-117.
    15. Osburg, Victoria-Sophie & Yoganathan, Vignesh & McLeay, Fraser & Diallo, Mbaye Fall, 2022. "(In)compatibilities in sustainable luxury signals," Ecological Economics, Elsevier, vol. 196(C).
    16. Florian H. Schneider, 2020. "Signaling ideology through consumption," ECON - Working Papers 367, Department of Economics - University of Zurich, revised Jul 2022.
    17. Afzaal Ali & Guo Xiaoling & Adnan Ali & Mehkar Sherwani & Farhan Muhammad Muneeb, 2019. "Customer motivations for sustainable consumption: Investigating the drivers of purchase behavior for a green‐luxury car," Business Strategy and the Environment, Wiley Blackwell, vol. 28(5), pages 833-846, July.
    18. Rita Abdel Sater, 2021. "Essays on the application of behavioural insights to environmental policy [Essais sur l’application des connaissances comportementales aux politiques environnementales]," SciencePo Working papers Main tel-03450909, HAL.
    19. Christian Cordes & Joshua Henkel, 2022. "Enhanced "Green Nudging": Tapping the Channels of Cultural Transmission," Bremen Papers on Economics & Innovation 2208, University of Bremen, Faculty of Business Studies and Economics.
    20. Shane Sanders, 2023. "Environmental Status Goods and Market-Based Conservation: An Arm of Ostrom’s Polycentric Approach?," Sustainability, MDPI, vol. 15(5), pages 1-9, February.
    21. Sun, Shanxia & Delgado, Michael & Khanna, Neha, 2017. "Hybrid Vehicles and Household Driving Behavior: Implications for Miles Traveled and Gasoline Consumption," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258502, Agricultural and Applied Economics Association.
    22. Joël Berger, 2017. "Are Luxury Brand Labels and “Green” Labels Costly Signals of Social Status? An Extended Replication," PLOS ONE, Public Library of Science, vol. 12(2), pages 1-17, February.

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    More about this item

    Keywords

    Environmental public goods; Signaling value; Hybrid cars; Quasi-experimental; Hedonic;
    All these keywords.

    JEL classification:

    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • H40 - Public Economics - - Publicly Provided Goods - - - General

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