Fair Trade | Jens Hainmueller

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

In Hainmueller, Hiscox, and Sequeira (2015), this study provides new insights into consumer demand for ethically sourced products using field experiments conducted in a U.S. grocery store chain. The results show that sales of the two most popular coffee brands increased by nearly 10% when labeled as Fair Trade, compared to a generic placebo label.

The study also highlights price sensitivity among consumers. While demand for higher-priced coffee remained stable despite an 8% price increase, demand for lower-priced coffee proved more elastic, with a 9% price hike leading to a 30% decline in sales. These findings indicate that while consumers value ethical sourcing, there is considerable variation in their willingness to pay for it.

References

Journal Articles

Rev. Econ. Stat.

Consumer demand for fair trade: Evidence from a multistore field experiment

Jens Hainmueller, Michael J Hiscox, and Sandra Sequeira

Review of Economics and Statistics, 2015

DOI Bib HTML PDF

@article{hainmueller2015consumer,
  title = {Consumer demand for fair trade: Evidence from a multistore field experiment},
  author = {Hainmueller, Jens and Hiscox, Michael J and Sequeira, Sandra},
  journal = {Review of Economics and Statistics},
  volume = {97},
  number = {2},
  pages = {242--256},
  year = {2015},
  publisher = {The MIT Press},
  doi = {10.1162/REST_a_00467},
  url = { https://doi.org/10.1162/REST_a_00467},
}