Isaac Post

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.

Happy shopping.

Isaac Post

Isaac Post is a Regulatory Policy Analyst at the Competitive Enterprise Institute.

Be the first to read Isaac Post's column. Sign up today and receive delivered each morning to your inbox.