Eco-labelled food products: what are consumers paying for?

TLDR

The study examines whether consumers’ willingness to pay a premium for eco‑labelled products is motivated by self‑interest or altruism. An incentive‑compatible experiment with within‑ and between‑subject designs tests how information that eco‑friendly products may not yield higher private benefits affects the price premium. In the within‑subject experiment the information had no effect on buying prices, indicating the premium is not based on perceived taste or safety but other motives, while in the between‑subject design the information altered prices for both the eco‑friendly and control products.

Abstract

The paper investigates whether the premium consumers are willing to pay for an eco-labelled product is driven by selfish or altruistic motives. Using an incentive-compatible experiment with both a within- and a between-subject design, we study the effect on this premium of information stating that eco-friendly products do not necessarily lead to higher private benefits. We find that this information does not affect buying prices in the within-subject experiment. This suggests that consumers’ willingness to pay for the eco-labelled product does not derive from perceived higher taste or safety attributes but from other motives. These results are confirmed in the between-subject design where we find that information affects buying prices for the eco-friendly product but also for the control product in the between-subject experiment.