This study examines consumer preferences for three socially responsible products: minimalpesticide strawberries, fair-trade bananas, and milk from pasture-fed cows. In-person survey data were collected in four states. Understanding preferences for these characteristics is difficult because they may appeal to different individuals depending on their personal attitudes and values. To address this issue, health, environmental and other attitudes are measured based on survey questions. Responses to these questions are used to produce explanatory factor scores. Stated preference models, both with and without factor scores, are estimated to evaluate the relative strengths of consumer preferences and motivations to purchase these products.
Key Words: ecolabels, fair-trade, socially responsible
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Products with socially responsible production attributes have been developed and marketed in response to a wide range of public concerns. Many of these attributes relate to environmental and social concerns, including such aspects as "fairtrade" for fair treatment of workers, humane treatment of domestic animals, minimizing the distance food is transported, wildlife and biodiversity preservation, and sustainability. Agricultural sustainability incorporates both the basic notion of preserving productivity and continuing land in its agricultural use. Recent studies have shown a greater interest in locally produced than organic products (Ostrom 2006).
In this study, we examine three food products with different socially responsible production attributes: minimal-pesticide strawberries, fairtrade bananas, and milk from pasture-fed cows. Survey data were collected for the purpose of this study in grocery stores and farmers markets in Minnesota, Oregon, Rhode Island, and Washington. A model based on random utility theory is estimated in order to evaluate the relative strengths of consumer preferences and motivations to purchase these products.
With many different options to choose from, a key research question is how socially aware consumers respond to expanded socially responsible choices and whether they respond differently across products. Understanding consumer preferences for characteristics such as reduced pesticides, fair-trade, and ethical treatment of animals is difficult because different ethical characteristics will appeal to different individuals, depending on their personal attitudes and values. In order to address this issue, health and environmental factors and other motivational factors were elicited through a series of survey questions. These factors are included in a separate model and are statistically significant.
Research on the economics of socially responsible products, though rarely targeted at actual consumer product demand, has covered a fairly broad range of topics. Some studies evaluate the overall impact of ecolabeling certification, including market inefficiencies (Swallow and Sedjo 2000). A number of studies have examined which consumers will purchase products with ecolabels based on survey results (Govindasamy and Italia 1998, Gumpper 2000, Loureiro, McCluskey, and Mittelhammer 2001, Nimon and Beghin 1999). These studies frequently indicate that consumers may prefer ecolabeled to standard products, and in some cases are willing to pay more for them. Teisl, Roe, and Hicks (2002) utilize actual sales data to evaluate whether the dolphin-safe label on tuna is effective in raising demand.
In general, studies find that ecolabels increase consumers' willingness to pay (WTP) for a particular product. Blend and van Ravenswaay (1999) examine willingness to pay for ecolabeled apples. Although Nimon and Beghin (1999) identify a premium for organic cotton fibers, they could not find evidence of a premium associated with environmentally friendly dyes. Loureiro, McCluskey, and Mittelhammer (2002) estimate mean willingness to pay for ecolabeled apples using a double-bounded logit model. …