Abstract:Labels address a market failure-asymmetric information-through costly expenditures borne by consumers, firms, and taxpayers. In this review, we explore when mandatory and voluntary labeling policies may be socially optimal. Although the analysis ostensibly revolves around simple comparisons of labeling costs and the subsequent benefits from improved information symmetry, more symmetric information may alter social welfare in other ways, e.g., by altering the production of externalities, the exercise of market … Show more
“…For ease of exposition, we do not distinguish between different categories of labels (third party versus second or first party, voluntary versus mandatory, private versus public, etc. ), but these categories are well described, and their implications discussed, in the literature (see, e.g., Horne, 2009;Roe, Teisl, & Deans, 2014;Rubik & Frankl, …”
"Gilles Grolleau and Naoufel Mzoughi thank the research programme ‘GESSOL’, sponsored by the French Ministry of Ecology, Sustainable Development and Energy"The economic literature has devoted relatively strong attention to eco-labelling schemes. Nevertheless, while succeeding in some markets, they often fall short of their promises. We analyse the gap between the academic design of eco-labelling schemes and their real implementation. We contend that providing information is not enough. We then use recent advances in behavioural economics to inform policy makers on the potential of behavioural interventions in order to design better eco-labelling schemes. Policy relevance Many public policies, including eco-labelling schemes, are still based on an inaccurate description of human decision making, mainly borrowed from standard economics. However, numerous psychological and behavioural studies show that people reg-ularly behave in ways that contradict some standard assumptions of economic analysis. Departing from the conventional view that information-based policies such as eco-labelling schemes will quasi-automatically help mitigate issues such as climate change by guiding consumers' and firms decisions, we argue that information provision is necessary but not sufficient. Admitting that consumers' decisions are guided by factors other than price and information, and, taking systematically into account be-havioural biases can offer to policy makers low-cost levers with first-order effects in order to increase the environmental per-formance of eco-labels, or at least decrease the likelihood of counterproductive effects
“…For ease of exposition, we do not distinguish between different categories of labels (third party versus second or first party, voluntary versus mandatory, private versus public, etc. ), but these categories are well described, and their implications discussed, in the literature (see, e.g., Horne, 2009;Roe, Teisl, & Deans, 2014;Rubik & Frankl, …”
"Gilles Grolleau and Naoufel Mzoughi thank the research programme ‘GESSOL’, sponsored by the French Ministry of Ecology, Sustainable Development and Energy"The economic literature has devoted relatively strong attention to eco-labelling schemes. Nevertheless, while succeeding in some markets, they often fall short of their promises. We analyse the gap between the academic design of eco-labelling schemes and their real implementation. We contend that providing information is not enough. We then use recent advances in behavioural economics to inform policy makers on the potential of behavioural interventions in order to design better eco-labelling schemes. Policy relevance Many public policies, including eco-labelling schemes, are still based on an inaccurate description of human decision making, mainly borrowed from standard economics. However, numerous psychological and behavioural studies show that people reg-ularly behave in ways that contradict some standard assumptions of economic analysis. Departing from the conventional view that information-based policies such as eco-labelling schemes will quasi-automatically help mitigate issues such as climate change by guiding consumers' and firms decisions, we argue that information provision is necessary but not sufficient. Admitting that consumers' decisions are guided by factors other than price and information, and, taking systematically into account be-havioural biases can offer to policy makers low-cost levers with first-order effects in order to increase the environmental per-formance of eco-labels, or at least decrease the likelihood of counterproductive effects
“…Particularly, whether the RRI certification should be voluntary or mandatory and, therefore, what should be the role of the government versus private sector in certification, who should bear the costs of certification (e.g., consumers, producers, taxpayers), and how to balance the costs of certification against the suite of social welfare impacts generated by improved information, altered externalities, modified market structure, etc. [110] According to Roe et al (2014), consumers' willingness to trust a certificate can be associated with the entity certifying the label [110]. Who, then, should be more credible and more adequate as a certifying entity in the case of RRI certification?…”
Responsible Research and Innovation (RRI) is a term used by policy-makers and academics to refer to research and innovation that is ethically acceptable and socially desirable. Despite the fact that the vast majority of research and innovation (R&I) is funded and produced by industry, companies tend to have no awareness or recognition of this concept. This is unfortunate, as the RRI paradigm could be mutually beneficial for both business and society: it could help businesses realise competitive opportunities while also leading to positive economic, societal and environmental impacts. This paper investigates how industry can be incentivised to engage in research and innovation following the approach of RRI. We propose a matrix of incentives for stimulating the adoption of RRI. We categorise incentives according to three dichotomies: external and internal, instrumental and non-instrumental, direct and indirect. The incentives are formalised in a causal loop diagram, which can be used to demonstrate the sound character of investing in RRI from a business perspective. We discuss examples of incentives, including corporate reputation and critical consumerism, certification, employee engagement, and governance. Lastly, to ensure effective implementation of RRI, we outline factors for the realisation of successful incentives for RRI in industry.
“…Under the title "The Economics of Voluntary Versus Mandatory Labels", Roe et al (2014) discuss groupspecific welfare effects and political economy aspects.…”
Our paper explores how participants of voluntary transparency systems react to the cancellation of such programmes. We concern ourselves with participants of the voluntary transparency scheme known as the "North Rhine-Westphalia Smiley". The Smiley system, which awarded the compliant behavior of businesses that joined it, was established in 2007 but cancelled in 2013 due to lack of participants. In our survey, the vast majority of the respondents express regret at the cancellation of the scheme. The goals of this paper are to (i) econometrically explain how sociodemographic, monetary, and non-monetary determinants influence participants' willingness to continue with the voluntary transparency system and (ii) find reasons for the inconsistency between the lack of participants and the expression of regret within our survey. We find evidence that the non-monetary variables "revenue" and "award" and the monetary variable "revenue" influence participants' regret. We speculate that status quo bias and loss aversion are the reasons why businesses favour maintaining the Smiley scheme once they have experienced it.
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.