Journal 18: Hainmueller Annotation

To start on my new question, I did some research and found an article written by Jens Hainmueller, an associate professor of political economy at Stanford Graduate School of Business. Without further ado, here's my annotation of some key points in "Will Consumers Actually Pay For Fair Trade?"

Right away, the title grabbed me. We all like to think that the things we buy were not at the cost of someone else's subjection to cruel labor, but this is not always the case. If a bag of chocolate chips said "Hey! An enslaved human being who was stripped of their basic rights suffered to help manufacture this!" it would not necessarily fly off the shelves. Careful marketing has deterred us as consumers from being jilted.

" If you ask consumers their preferences (as most marketing research does), many people will exaggerate their willingness to spend more for a good cause due to what researchers call social desirability bias."

This made me wonder what exactly social desirability bias is. Social desirability bias is the tendency of people to over-exaggerate their good behavior and under-state their shortcomings. In this instance, people are overstating how ethical they shop. They are understating their weakness when it comes to unethical consumer goods.

“The benefit of using a field experiment is that you get real shoppers, real purchases, and therefore real answers,” says Hainmueller. The researchers conducted two experiments in 26 stores of a major U.S. chain in Connecticut, Massachusetts, Maine, and Rhode Island in 2008 and 2009."

Why just the northeast? These states are all within the same region of the U.S. and share a fairly similar political climate. I would be interested to see how this experiment would play out in liberal California or New York as well as more conservative states in the midwest. Politics play into this in the sense that typically speaking, those left of the spectrum are more environmentally conscious in how they act and legislate.

"They put a fair-trade label on two kinds of coffee. To rule out a pure label effect, the researchers placed a label in the control stores that looked like the fair-trade label but included no ethical claim. “This is like the placebo drug, which looks like the real drug but does not have the key ingredient in it,” Hainmueller says.

They also designed and placed the label to make it challenging for consumers to see — someone would need to be fairly interested to locate it. The researchers found sales of the two most popular bulk coffees rose by almost 10% when the coffees carried a fair-trade label as compared with the placebo label."

This somewhat gives me insight on the control group for Morality vs Reality. It is not the lack of care about the ethics, but about the price. If ethical products were priced the same as non-ethical products, would we shop more ethically? I would hope so.

Jens Hainmueller

“It is possible you would have gotten a different set of results if you tried this at a bargain hunting shop,”

I had not previously considered how what store the consumer good is at can play into morality vs reality. Stores like Whole Foods are so expensive because of ethical sourcing, so their shoppers are typically willing to pay more. Like Hainmueller said, this is not the case at bargain-based superstores.

"But the fact that the researchers saw the results in 2008-2009, when even high-income households were under financial pressure, suggests that consumers saw a concrete value in the fair-trade label."

This gives me hope in the answers I may find to my question. Even when the economy is suffering, morality is not lost. Why is this? I think part of it is that when we are faced with our own struggles, we try to do what is right and think more about our actions. We are looking for any solution to make things better.

The researchers were careful not to attribute any motivations to the consumers. “The simplest type of assumption is that consumers derive a warm glow from supporting a program that is helping poor coffee farmers,” they write. Yet there are other explanations: Consumers may buy it to keep up appearances or as a status symbol.

Is this necessarily a bad thing? Yes and no. Part of me says that whatever motivates people to buy more ethically, that's great, yet I also wish that compassion was the purest factor in why consumers shop ethically.