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2010-10-23 | Peer Reviewed

Conformity and the Demand for Environmental Goods

Carlsson, Fredrik, Åsa Löfgren and Jorge H. García. 2010. “Conformity and the Demand for Environmental Goods.” Environmental and Resource Economics 47: 407-421.
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We test the hypothesis that people conform to certain social norms, i.e. that some individuals may be willing to pay a higher price premium for green products the more widespread green consumerism is in society.

To investigate consumer preferences for environmentally friendly products, we conducted a choice experiment where the respondents were asked to choose among coffee products varying with respect to their share of ecological beans, share of fair trade beans, and price. Three treatments were used, differing only in the information given about the choices made by other consumers. More specifically, the respondents in the three subgroups were told that 10%, 50%, and 90% of all other consumers chose the alternative with 100% ecological beans. We find different responses to the treatments across individuals. In particular, we can only confirm our hypothesis of conformity for women, although men appear to have stronger preferences for ecological coffee than women.