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Are the poor willing to pay a premium for designer labels? a field experiment in Bolivia


  • Luuk Van Kempen


This paper provides an empirical test of whether consumers in developing countries who live under conditions of poverty are prepared to pay a premium for products that feature a designer label, not because these are perceived as being of higher quality but for symbolic reasons. For this purpose a field experiment was conducted among urban, low-income consumers in Bolivia. An incentive-compatible procedure was used to elicit willingness-to-pay for designer brand perfume and an intrinsically equivalent non-branded perfume. After correcting for possible “quality illusion”, we find that poor consumers, as a group, are willing to pay a premium for the designer label as a symbol. This willingness to pay for a designer logo depends on respondents' relative economic situation, education level and the frequency of watching soaps on television.

Suggested Citation

  • Luuk Van Kempen, 2004. "Are the poor willing to pay a premium for designer labels? a field experiment in Bolivia," Oxford Development Studies, Taylor & Francis Journals, vol. 32(2), pages 205-224.
  • Handle: RePEc:taf:oxdevs:v:32:y:2004:i:2:p:205-224 DOI: 10.1080/13600810410001699957

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    References listed on IDEAS

    1. Ravallion, Martin & Datt, Gaurav, 1996. "How Important to India's Poor Is the Sectoral Composition of Economic Growth?," World Bank Economic Review, World Bank Group, vol. 10(1), pages 1-25, January.
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    5. Oulton,Nicholas & O'Mahony,Mary, 1994. "Productivity and Growth," Cambridge Books, Cambridge University Press, number 9780521453455, March.
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    7. Bhagwati, Jagdish N., 1988. "Poverty and public policy," World Development, Elsevier, vol. 16(5), pages 539-555, May.
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    Cited by:

    1. Stokburger-Sauer, Nicola E. & Teichmann, Karin, 2013. "Is luxury just a female thing? The role of gender in luxury brand consumption," Journal of Business Research, Elsevier, vol. 66(7), pages 889-896.
    2. Bian, Qin & Forsythe, Sandra, 2012. "Purchase intention for luxury brands: A cross cultural comparison," Journal of Business Research, Elsevier, vol. 65(10), pages 1443-1451.
    3. Martin Ravallion & Shaohua Chen, 2011. "Weakly Relative Poverty," The Review of Economics and Statistics, MIT Press, vol. 93(4), pages 1251-1261, November.
    4. Truyts, Tom, 2012. "Signaling and indirect taxation," Journal of Public Economics, Elsevier, vol. 96(3), pages 331-340.
    5. Rik Linssen & Luuk Kempen & Gerbert Kraaykamp, 2011. "Subjective Well-being in Rural India: The Curse of Conspicuous Consumption," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 101(1), pages 57-72, March.
    6. Lee, Jieun & Ko, Eunju & Megehee, Carol M., 2015. "Social benefits of brand logos in presentation of self in cross and same gender influence contexts," Journal of Business Research, Elsevier, vol. 68(6), pages 1341-1349.

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