IDEAS home Printed from https://ideas.repec.org/p/inq/inqwps/ecineq2005-04.html
   My bibliography  Save this paper

The demand for socially responsible products: empirical evidence from a pilot study on fair trade consumers

Author

Listed:
  • Leonardo Becchetti

    (Economics Department, University of Rome “Tor Vergata”)

  • Furio Camillo Rosati

    (Economics Department, University of Rome “Tor Vergata”)

Abstract

We analyze behaviour and motivations of a sample of about one thousand consumers purchasing “fair trade (FT) goods”, i. e. food and artisan goods which include socially responsible (SR) characteristics and a price premium for primary product producers with respect to equivalent non SR products. By estimating a simultaneous two-equation treatment regression model we find that FT products have less than unit income elasticity and their demand is negatively (positively) correlated with geographical distance from the nearest shop (age and awareness of SR criteria). Awareness of SR criteria depends, in turn, on a series of factors (consumption habits, membership of volunteer associations) which, indirectly (via increased awareness), significantly affect consumption. We also measure consumers’ willingness to pay in excess for the SR features of FT products with a contingent evaluation approach and find that it is positively correlated with awareness of SR criteria.

Suggested Citation

  • Leonardo Becchetti & Furio Camillo Rosati, 2005. "The demand for socially responsible products: empirical evidence from a pilot study on fair trade consumers," Working Papers 04, ECINEQ, Society for the Study of Economic Inequality.
    • Handle: RePEc:inq:inqwps:ecineq2005-04
    as

    Download full text from publisher

    File URL: http://www.ecineq.org/milano/WP/ECINEQ2005-04.pdf
    File Function: First version, 2005
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Fehr, Ernst & Falk, Armin, 2002. "Psychological foundations of incentives," European Economic Review, Elsevier, vol. 46(4-5), pages 687-724, May.
    2. Manning, Alan, 2003. "The real thin theory: monopsony in modern labour markets," Labour Economics, Elsevier, vol. 10(2), pages 105-131, April.
    3. Fatma El-Hamidi & Katherine Terrell, 2002. "The Impact of Minimum Wages on Wage Inequality and Employment in the Formal and Informal Sector in Costa Rica," International Economic Association Series, in: Richard B. Freeman (ed.), Inequality Around the World, chapter 8, pages 188-203, Palgrave Macmillan.
    4. Ernst Fehr & Klaus M. Schmidt, 1999. "A Theory of Fairness, Competition, and Cooperation," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(3), pages 817-868.
    5. Steven Suranovic, 2002. "International Labour and Environmental Standards Agreements: Is This Fair Trade?," The World Economy, Wiley Blackwell, vol. 25(2), pages 231-245, February.
    6. Carl M. Campbell III & Kunal S. Kamlani, 1997. "The Reasons for Wage Rigidity: Evidence from a Survey of Firms," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(3), pages 759-789.
    7. Becchetti, Leonardo & Solferino, Nazaria, 2005. "The dynamics of ethical product differentiation and the habit formation of socially responsible consumers," AICCON Working Papers 8-2005, Associazione Italiana per la Cultura della Cooperazione e del Non Profit.
    8. Basu, Kaushik & Van, Pham Hoang, 1998. "The Economics of Child Labor," American Economic Review, American Economic Association, vol. 88(3), pages 412-427, June.
    9. José Márcio Camargo, 1984. "Minimum wage in Brazil theory, policy and empirical evidence," Textos para discussão 67, Department of Economics PUC-Rio (Brazil).
    10. Timothy G. Conley & Christopher R. Udry, 2010. "Learning about a New Technology: Pineapple in Ghana," American Economic Review, American Economic Association, vol. 100(1), pages 35-69, March.
    11. Ronald Mendoza & Chandrika Bahadur, 2002. "Toward Free and Fair Trade: A Global Public Good Perspective," Challenge, Taylor & Francis Journals, vol. 45(5), pages 21-62.
    12. Sara lemos, 2004. "The Effects of the Minimum Wage in the Formal and Informal Sectors in Brazil," Discussion Papers in Economics 04/8, Division of Economics, School of Business, University of Leicester.
    13. P. De Pelsmacker & L. Driesen & G. Rayp, 2003. "Are fair trade labels good business ? Ethics and coffee buying intentions," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 03/165, Ghent University, Faculty of Economics and Business Administration.
    14. Anderson, Simon, 1987. "Spatial competition and price leadership," International Journal of Industrial Organization, Elsevier, vol. 5(4), pages 369-398.
    15. Kaushik Basu, 1999. "International Labor Standards and Child Labor," Challenge, Taylor & Francis Journals, vol. 42(5), pages 80-93, September.
    16. Peter A. Diamond & Jerry A. Hausman, 1994. "Contingent Valuation: Is Some Number Better than No Number?," Journal of Economic Perspectives, American Economic Association, vol. 8(4), pages 45-64, Fall.
    17. Fabrizio Adriani & Leonardo Becchetti, 2004. "Fair Trade: A 'Third Generation' Welfare Mechanism to Make Globalisation Sustainable," CEIS Research Paper 62, Tor Vergata University, CEIS.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Nindl, Elisabeth, 2014. "An empirical assessment of Fairtrade: A perspective for low-and middle-income countries?," Department of Economics Working Paper Series 160, WU Vienna University of Economics and Business.
    2. Elisabeth Nindl, 2014. "An empirical assessment of Fairtrade: A perspective for low- and middle-income countries?," Department of Economics Working Papers wuwp160, Vienna University of Economics and Business, Department of Economics.
    3. Elisabeth Nindl, 2014. "An empirical assessment of Fairtrade: A perspective for low- and middle-income countries?," EcoMod2014 6866, EcoMod.
    4. Leslie J. Verteramo Chiu & Jura Liaukonyte & Miguel I. Gómez & Harry M. Kaiser, 2017. "Socially responsible products: what motivates consumers to pay a premium?," Applied Economics, Taylor & Francis Journals, vol. 49(19), pages 1833-1846, April.
    5. Verteramo Chiu, Leslie J. & Gómez, Miguel I. & Kaiser, Harry M. & Yan, Jubo, 2014. "Socially-Responsible Certification Schemes for Smallholder Coffee Farmers: Economics of Giving and Consumer Utility," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 170551, Agricultural and Applied Economics Association.
    6. Benjamin HUYBRECHTS, 2007. "Fondements Et Implications De La Diversité Organisationnelle Au Sein Du Commerce Équitable," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 78(2), pages 195-219, June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Leonardo Becchetti & Furio Camillo Rosati, 2007. "Global Social Preferences and the Demand for Socially Responsible Products: Empirical Evidence from a Pilot Study on Fair Trade Consumers," The World Economy, Wiley Blackwell, vol. 30(5), pages 807-836, May.
    2. Becchetti Leonardo & Giorgio Federico & Solferino Nazaria, 2011. "What to do in globalised economies if global governance is missing? The vicarious role of competition in social responsibility," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 58(2), pages 185-211, June.
    3. Becchetti, Leonardo & Federico, Giorgio & Solferino, Nazaria, 2005. "The game of social responsibility: pioneers, imitators and social welfare," AICCON Working Papers 15-2005, Associazione Italiana per la Cultura della Cooperazione e del Non Profit.
    4. Becchetti, Leonardo & Solferino, Nazaria, 2005. "The dynamics of ethical product differentiation and the habit formation of socially responsible consumers," AICCON Working Papers 8-2005, Associazione Italiana per la Cultura della Cooperazione e del Non Profit.
    5. Daniel McFadden, 2009. "The human side of mechanism design: a tribute to Leo Hurwicz and Jean-Jacque Laffont," Review of Economic Design, Springer;Society for Economic Design, vol. 13(1), pages 77-100, April.
    6. Lin, Chung-Cheng & Yang, C.C., 2010. "Reciprocity and downward wage rigidity," Journal of Macroeconomics, Elsevier, vol. 32(4), pages 1155-1168, December.
    7. Eugenia Fotoniata & Thomas Moutos, 2013. "Product Quality, Informality, and Child Labor," Review of Development Economics, Wiley Blackwell, vol. 17(2), pages 268-283, May.
    8. Leonardo Becchetti & Stefano Castriota, 2008. "Is Fair Trade Honey Sweeter? An empirical analysis on the effect of affiliation on productivity," Working Papers 104, ECINEQ, Society for the Study of Economic Inequality.
    9. Chung-cheng Lin & C.C. Yang, 2006. "Receiprocity and Downward Wage Rigidity," IEAS Working Paper : academic research 06-A015, Institute of Economics, Academia Sinica, Taipei, Taiwan.
    10. Matthias Doepke & Fabrizio Zilibotti, 2005. "The Macroeconomics of Child Labor Regulation," American Economic Review, American Economic Association, vol. 95(5), pages 1492-1524, December.
    11. Azariadis, Costas & Stachurski, John, 2005. "Poverty Traps," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 5, Elsevier.
    12. G. Bellettini & C. Berti Ceroni, 2000. "Compulsory schooling laws and the cure against child labor," Working Papers 394, Dipartimento Scienze Economiche, Universita' di Bologna.
    13. Caroline Orset, 2008. "A Theory of Child Protection against Kidnapping," Cahiers de recherche 0816, CIRPEE.
    14. B Kelsey Jack, "undated". "Market Inefficiencies and the Adoption of Agricultural Technologies in Developing Countries," CID Working Papers 50, Center for International Development at Harvard University.
    15. Fabre, Alice & Pallage, Stéphane, 2015. "Child labor, idiosyncratic shocks, and social policy," Journal of Macroeconomics, Elsevier, vol. 45(C), pages 394-411.
    16. Jayanta Sarkar & Dipanwita Sarkar, 2016. "Why Does Child Labor Persist With Declining Poverty?," Economic Inquiry, Western Economic Association International, vol. 54(1), pages 139-158, January.
    17. Jinkins, David, 2016. "Conspicuous consumption in the United States and China," Journal of Economic Behavior & Organization, Elsevier, vol. 127(C), pages 115-132.
    18. Basu, Kaushik & Das, Sanghamitra & Dutta, Bhaskar, 2010. "Child labor and household wealth: Theory and empirical evidence of an inverted-U," Journal of Development Economics, Elsevier, vol. 91(1), pages 8-14, January.
    19. Chemin, Matthieu & Mbiekop, Flaubert, 2015. "Addressing child sex tourism: The Indian case," European Journal of Political Economy, Elsevier, vol. 38(C), pages 169-180.
    20. Sim, Armand & Suryadarma, Daniel & Suryahadi, Asep, 2017. "The Consequences of Child Market Work on the Growth of Human Capital," World Development, Elsevier, vol. 91(C), pages 144-155.

    More about this item

    Keywords

    fair trade; social preferences; willingness to pay;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:inq:inqwps:ecineq2005-04. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Maria Ana Lugo (email available below). General contact details of provider: https://edirc.repec.org/data/ecineea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.