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New Study Reveals Consumers Support Fair Trade With Their Shopping Dollar

When asked in surveys, most consumers say they’d prefer to buy products made where fair labor practices are followed.  But do they put their money where their mouths are—do they in reality buy products that are produced under fair trade conditions?  Two researchers from MIT and Harvard wondered the same thing.

So they ran a field experiment that is one of the first scientifically conducted studies of buyer behavior when it comes to ethical shopping.  I actually read the recently published 27-page report*, dredging up my MBA statistics courses to decipher their findings for you.

The 4-week experiment included 111 Banana Republic factory outlet stores in 38 states.  It focused on three products–a $130 women’s linen suit, an $18 women’s yoga pant, and a $12 men’s T-shirt.  All three were produced in factories audited for compliance with the company’s Code of Vendor Conduct**, a set of criteria covering minimum wages, maximum hours, and safety, among others.

With the help of parent company Gap, the researchers created 2 versions of in-store display signs for the three products.  One version emphasized the fashion aspects of the product. The other focused instead on how the product was made and the company’s commitment to promoting fair and safe working conditions.

Fashion Message                                             Fairness Message

                 

What they found was that the fair trade sign increased both dollar and unit sales of the $130 suit by a statistically significant 14% compared with control group stores that had no signs displayed.  For the two cheaper products, neither version of the sign had any significant effect on sales compared with the control.

What’s their conclusion?  There is a “substantial segment of shoppers willing to support fair labor standards by voting with their shopping dollar.”  That segment is women shoppers interested in higher priced items.

They found this especially significant given where they conducted the study–in outlets, a setting where customers are primarily concerned with prices and are less likely to be influenced by information about ethical product attributes.

It’s an encouraging study that should give everyone involved with fair trade a boost.

 

* Hainmueller, Jens and Hiscox, Michael J., The Socially Conscious Consumer? Field Experimental Tests of Consumer Support for Fair Labor Standards (May 18, 2012). MIT Political Science Department Research Paper No. 2012-15.

**The authors acknowledge that Gap’s compliance with its Code of Vendor Conduct is not verified by an independent third party.  In fact, Gap’s creation of its Code in the mid-1990’s was a result of public outcry over its factory working conditions. Gap has its own team of “Social Responsibility Specialists” who in 2010 conducted 2500 audits of 1200 facilities that make its products.

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4 comments on “New Study Reveals Consumers Support Fair Trade With Their Shopping Dollar

  1. Doesn’t having only one higher priced item skew the study? Why wasn’t there a larger ticket men’s item included? How ethically produced are products sold at Banana Republic, really?

    • Jessica–Good points. The report includes statistical data relative to factoring in or out variables that would skew the data. Also, here is what the authors said about why they chose these 3 products and the factory conditions under which they were made: “The three specifi c products – linen suit, yoga pant, and t-shirts – were selected for the tests because they included both women’s and men’s items, covered a range of prices, and were introduced in all stores at the same time. The items were also produced in factories audited for compliance with the company’s Code of Vendor Conduct (COVC).”

  2. Thank you for bringing attention to this. Seems like a fairly lightweight study – but this kind of research is greatly needed if fair trade is going to gain momentum. I’m involved in the jewellery sector in the UK, where we launched “fairtrade and fairmined gold” last year, and there is apretty hot debate now about price sensitivity versus ethical drivers and the ability of fair trade jewellers to compete in the non-fair trade high street.

  3. […] consumers paid 45 percent more for shirts labeled “ethically certified” on eBay. In a separate study, he found a 14 percent sales lift on clothing labeled “socially-conscious” in Banana […]

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