Price green inference: The role of green = higher production cost lay belief

This paper examines how price influences consumers’ perceptions of the eco-friendliness of green products. We propose that consumers hold a lay belief that green products involve higher production costs, which drives their price-based inferences about product greenness. Across six experiments using different product categories and measures of green perception, we find that consumers perceive higher-priced green products as more eco-friendly than lower-priced ones. This effect is mediated by perceived production cost and moderated by trust in green claims. We also show that price-based inferences can result in biased and incorrect evaluations of greenness, even when objective information is available. While lower-priced green products are often perceived as less green, transparent communication about the reasons for lower prices can mitigate this adverse effect. We discuss the theoretical and practical implications of our findings for the literature on green perception and lay beliefs.