1. Prof. Michael Hiscox Department of Government Harvard University Just Supply Chain Conference Stanford, May 16-17, 2008 Consumer Demand for Ethical Standards: Field Experiments with Ethical Product Labeling

2. Will consumers pay extra for standards? What do we know about consumer demand for standards?  Surveys: About 75% of consumers say that would pay more for products made with good labor standards  Sales: The US market for Fair Trade Certified goods has grown by almost 50% per year since 2001 Our field experiments to test consumer responses to ethical product labeling:  In-store experiments: label items/displays, alter prices  Using eBay: auction labeled/unlabeled items

3. Our eBay auctions  Coffee: created our own brand of fresh roasted beans; all Fair Trade certified  Polo Shirts: sourced shirts from Cutter & Buck’s SA8000 certified suppliers  Method: we sold labeled and unlabeled coffee and shirts in simultaneous auctions

4. eBay Auction Results COFFEE AUCTION PAIRS (n=81) Bid Prices: Total Prices (incl. shipping): Fair TradeControl%PremiumFair TradeControl%Premium Mean10.458.87 24.79 % 19.0417.748.64 % Std3.732.93 3.803.47

5. eBay Auction Results SHIRT AUCTION PAIRS (n=28) Bid Prices: Total Prices (incl. shipping): SA 8000Control%PremiumSA 8000Control%Premium Mean13.1712.17 47.36 % 17.7616.7613.28 % Std6.506.92 6.506.93

6. eBay Auction Results

7. New research on the way … In-store experiments with a leading grocery retailer:  Experiments with labels, product displays, and prices, in all their New England stores  Labels include retailer’s own-brand ethical label as well as Fair Trade Certified and Rainforest Alliance Certified Online experiments and surveys:  Survey of all bidders in our eBay auctions to examine the socio-demographic predictors of ethical consumption  Online retail store with treatments (labels, prices, information) randomized across individual shoppers