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

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

By
Jens Hainmueller, Michael J. Hiscox, Sandra Sequeira
MIT Press Journals. June
24, 2014

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.