Does willingness to pay increase with the number and strictness of sustainability labels?

Abstract

Labels signaling sustainable product attributes are gaining importance, although uncertainty concerning the environmental, micro-and macroeconomic benefits of such labels persist. One of the questions still incompletely answered is whether Willingness To Pay (WTP) varies with a gradually increasing number of labels on a food product. In order to answer this question, we conducted a laboratory experiment with 191 student respondents, testing consumer valuations of different labeling strategies. Using the Becker-DeGroot-Marschak mechanism, WTP for 15 food products was measured. The products were endowed with up to six different sustainability labels, such that each grocery item was available in eight product versions. For perishable, non-perishable and plant-based products, the results indicate that participants are prone to allocating WTP-premiums to labeled products, more than to unlabeled products. For animal products, however, labels do not influence WTP significantly. Furthermore, the premiums do not vary with an increasing number of labels, irrespective of whether the labels signal substitute or complementary sustainability information. The results are not entirely in line with normative notions of magnitude variation, but rather with the behavioral economic concept of embedding effects.

The facets of consumer-based food label equity: Measurement, structure and managerial relevance

“…Moreover, embedding or information overload effects may appear. In a study considering how willingness to pay develops if up to six sustainability labels are gradually added to 15 food products, Tebbe and von Blanckenburg (2018) demonstrate that the premiums do not vary as the number of food labels increases. Again, beyond the effect of multi-labeling on label global equity, the roles of the credibility, the clarity, and the visibility of food labels in the construction of their equity remain unclear.…”

Effect of Environmental and Altruistic Attitudes on Willingness-to-Pay for Organic and Fair Trade Coffee in Flanders

“…The growth has been accompanied by massive research spanning major markets in Europe [33,34], America [35,36], China [37,38] and Japan [12]. Some studies have examined consumers' awareness and perception [33,39]. Others have either focussed on willingness-to-pay [36,40] or assessed factors contributing to varying preference levels across markets for these labels [41][42][43].…”

“…These studies have been motivated by several factors. First, they appreciate consumer preferences on number of labels a sustainable product should have [27,39,50]. Second, they acknowledge the frequent overlaps in labels' objectives [21].…”

Are people's daily life habits consistent with their preference for food sustainability labels?

“…Our results are also consistent with previous findings that consumers tend to have various preferences for food sustainability labels when they are on different types of food products, especially when they are put on plant‐based products and animal‐based products. For example, Tebbe and von Blanckenburg (2018) find that although consumers are willing to pay a price premium for ecolabeled plant‐based food products, they are unwilling to pay any price premium for similar animal‐based food products. Our results suggest that the rank of MWTP for different food sustainability labels is consistent across plant‐based (strawberries) and animal‐based (fresh milk) food products, but consumers' MWTP for non‐GMO, ecofriendly, and USDA organic labels are not statistically and significantly different from each other when they are on strawberries.…”