Recently, the celebrity gossip blog, DMZ, took a swipe at celebrities “who claim they’re green, but guzzle gas”. George Clooney, among others, was mocked for his ‘I drive an electric car so I’m environmentally conscious—except when I’m flying to Tokyo in my private jet’ hypocrisy. But besides delivering a smacking to self-righteous celebrities, such an expose illustrates the sizable gap that exists between the attitude and behavior of “ethical” consumers.<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />
Conscientious or ethical consumption is the new frame through which we are asked to view our economic decisions. For instance, the New York Times suggests asking “How Green is My Conscience?” while the Washington Post argues that it is [liberal] guilt that leads us to worry about the ethical content of our purchasing decisions in the first place. So it seems that finding a low-priced, good quality product is not enough, you should “feel good” about your purchase, in a Good Samaritan-type of way. But do we really?
We can certainly pose beside our electric car and feel good about ourselves as Mr. Clooney does so well. But even though we claim to want to do our part to save the planet by buying the organic lettuce for $4.80 at supermarket X instead of the regular lettuce for $1.80 at supermarket Y, we don’t even do this.
Studies of ethical consumers often are little more than opinion surveys that ask ‘would you be willing to pay a little more to help save the rainforests?’ And of course you would, because you’re a good person who wants to walk away from the survey with a green conscience. But this tells us nothing useful because it only measures attitudes and not actual behavior as revealed by consumers’ willingness to pay. Furthermore, one also needs to take into account factors such as brand preference, other values (“buy American”, for example), socio-demographic characteristics, price and various measures of quality.
A group of Belgian business professors published a study last year that attempts to do all of this. The authors' idea was to use the FairTrade coffee label as a proxy for ‘ethical consumption' and then to estimate consumers’ willingness to pay for it. Initially, the study finds that, as expected, coffee drinkers claim that whether the coffee is FairTrade or not—that is, whether a given coffee product is "ethical"—matters. But upon further investigation, it turns out that coffee drinkers actually place a higher value on both the brand name of coffee as well as on coffee taste (a measure of product quality). Finally, only 10 percent of coffee drinkers were willing to pay a premium of 27 percent above the average coffee price for FairTrade coffee. In the authors’ words, “the appreciation for the fair-trade attribute was not strong enough to support the actual price premium.”
The point of this is not to argue that one should only look at the price when making a purchasing decision. On the contrary, people buy things for many different reasons. But just because someone asserts that he makes a consumption decision based on ethical or environmental concerns doesn’t make it so. And, in fact, there is evidence to suggest it is not so.
Moreover, we have not even begun to examine whether “ethical” consumption offers any measurable benefits to anyone. Nor have we even questioned the implication of this discussion that “normal” consumption—consumption that doesn’t contain a contrived moral/political assessment—is somehow unethical.