What Are People Willing to Pay for Social Sustainability? A Choice Experiment among Dutch Consumers

Abstract

A relatively large number of studies has shown that consumers are willing to pay more for products that are certified as being environmentally or socially responsible, but most of these studies focus on the willingness to pay (WTP) for environmental benefits, while insights into the WTP for social benefits are limited. More research in this area will shed light on consumer choices and help policymakers to better direct the food industry toward social sustainability. In this paper, we carry out a Discrete Choice Experiment among Dutch consumers to measure consumer WTP for five social sustainability benefits; (1) no child labor; (2) liveable wage and safe working environment; (3) project for the education of workers; (4) equal wages for men and women; and (5) freedom to join a trade union. The novelty of our research in comparison with previous studies is that we aim to differentiate the WTP for various social standards instead of estimating an overall WTP for fair-trade labels. In addition to average price premiums per social standard, our latent class models also give insight into heterogeneity in WTP, or more specifically, stated price premiums by different groups (or market segments) in society. The results suggest that substantial price premiums for social sustainability benefits may exist, which currently are not reflected in food prices. Including price premiums for market products that fully incorporate societal costs of those products, so-called true prices or shadow prices, will decrease consumer demand for less-sustainable products and will lead to a fairer and more sustainable economic system. Our results also show that the price premiums may vary substantially between the various categories of social sustainability benefits and across products and market segments. Further research on assessing the motivations behind consumer choices for more-sustainable products is crucial here, especially for campaigns aimed at enhancing their market shares.

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