Consumer Demand for Fair Labor Standards: Evidence from a Field Experiment on eBay

Abstract

Surveys indicate that a majority of consumers would prefer to buy products made in workplaces with fair labor standards rather than alternatives and would be willing to pay a higher price for such products. There is no clear evidence, however, that many people would actually behave in this fashion when shopping. We provide new evidence on consumer behavior from experiments conducted on eBay. We find that labels with information about certified fair labor standards in factories making polo shirts had a substantial positive effect on bidding. On average, shoppers paid a 45% premium for ethically labeled versus unlabeled shirts.

Keywords: consumer behavior, altruism, social responsibility, field experiments

JEL Classification: D12, D64, M14, C93