Researchers from Harvard, the London School of Economics and Massachusetts Institute of Technology Release Study on the Value of Ethical Labeling
To investigate the topic of consumer demand for Fair Trade products, researchers Jens Hainmueller of the Massachusetts Institute of Technology, Michael J. Hiscox of Harvard University, and Sandra Sequeira of the London School of Economics, conducted a six-month research study in partnership with a prominent national grocery retailer. As reported this weekend in the Wall Street Journal, the team examined purchasing behavior among actual consumers at 26 stores and key findings show that:
- The Fair Trade Certified label alone has a large positive impact on sales.
- Sales of the two most popular bulk coffees sold in each of the 26 test stores increased by up to 13 percent when labeled as Fair Trade Certified.
- The study also revealed that a substantial segment of consumers are willing to pay up to eight percent more for a product bearing the Fair Trade Certified label.
The findings are consistent with a Globescan study conducted in 2010, which revealed that 75 percent of consumers said Fair Trade certification makes them feel "very positive or positive" about products; 30 percent said Fair Trade is "likely to increase their purchase interest;" and over half said "independent third-party certification is the best way to verify" a product's social and environmental claims.
"Overall the findings suggest that there is substantial consumer support for Fair Trade," said Michael J. Hiscox of Harvard University. "The Fair Trade label by itself had a large positive effect on sales, indicating that a substantial number of coffee buyers place a positive value on Fair Trade certification. In addition, a sizeable segment of coffee buyers were willing to pay a premium for coffee if the premium was directly associated with support for Fair Trade. The tests suggest that there are plenty of consumers ready to vote with their shopping dollars to support Fair Trade when it is offered as an option by retailers."
The study can be referenced online at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1801942.
Fair Trade USA (previously TransFair USA), a nonprofit organization, is the leading third-party certifier of Fair Trade products in the United States. Fair Trade USA audits and certifies transactions between U.S. companies and their international suppliers to guarantee that the farmers and workers producing Fair Trade Certified goods were paid fair prices and wages, work in safe conditions, protect the environment, and receive community development funds to empower and uplift their communities. Fair Trade USA educates consumers, brings new manufacturers and retailers into the Fair Trade system, and provides farming communities with tools, training and resources to thrive as international businesspeople. Visit www.FairTradeUSA.org for more information.
The Research team consists of Michael J. Hiscox, the Clarence Dillon Professor of International Affairs at Harvard University; Sandra Sequeira, Lecturer in Development Economics at the London School of Economics; and Jens Hainmueller, an Assistant Professor of Political Science at the Massachusetts Institute of Technology.
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