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Consumer Demand for Fair Trade: Evidence from a Multistore Field Experiment

Author

Listed:
  • Jens Hainmueller

    (Standford University)

  • Michael J. Hiscox

    (Harvard University)

  • Sandra Sequeira

    (London School of Economics)

Abstract

We provide new evidence on consumer demand for ethical products from experiments conducted in a U.S. grocery store chain. We find that sales of the two most popular coffees rose by almost 10% when they carried a Fair Trade label as compared to a generic placebo label. Demand for the higher-priced coffee remained steady when its price was raised by 8%, but demand for the lower-priced coffee was elastic: a 9% price increase led to a 30% decline in sales. While consumers attach value to ethical sourcing, there is significant heterogeneity in willingness to pay for it. © 2015 The President and Fellows of Harvard College and the Massachusetts Institute of Technology

Suggested Citation

  • Jens Hainmueller & Michael J. Hiscox & Sandra Sequeira, 2015. "Consumer Demand for Fair Trade: Evidence from a Multistore Field Experiment," The Review of Economics and Statistics, MIT Press, vol. 97(2), pages 242-256, May.
    • Handle: RePEc:tpr:restat:v:97:y:2015:i:2:p:242-256
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    File URL: http://www.mitpressjournals.org/doi/pdf/10.1162/REST_a_00467
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    Keywords

    comsumer demand; ethical products; Fair Trade; coffee; ethical sourcing; heterogeneity;
    All these keywords.

    JEL classification:

    • Q00 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - General
    • Q02 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Commodity Market
    • G00 - Financial Economics - - General - - - General

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