Reflective Willingness to Pay: Preferences for Sustainable Consumption in a Consumer Welfare Analysis

26 Pages Posted: 14 Jan 2021 Last revised: 7 Jul 2021

See all articles by Stefan Thomas

Stefan Thomas

University of Tuebingen - Faculty of Law

Roman Inderst

Goethe University Frankfurt

Date Written: July 05, 2021

Abstract

Our starting point is the following simple but potentially underappreciated observation: When assessing willingness to pay (WTP) for hedonic features of a product, the results of such measurement are influenced by the context in which the consumer makes her real or hypothetical choice or in which the questions to which she replies are set (such as in a contingent valuation analysis). This observation is of particular relevance when WTP regards sustainability, the “non-use value” of which does not derive from a direct (physical) sensation and where perceived benefits depend heavily on available information and deliberations. The recognition of such context sensitivity paves the way for a broader conception of consumer welfare (CW), and our proposed standard of “reflective WTP” may materially change the scope for private market initiatives with regards to sustainability, while keeping the analytical framework within the realm of the CW paradigm. In terms of practical implications, we argue, for instance, that actual purchasing decisions may prove insufficient to measure consumer appreciation of sustainability, as they may rather echo learnt but unreflected heuristics and may be subject to the specific shopping context, such as heavy price promotions. Also, while it may reflect current social norm, the latter may change considerably over time as more consumers adopt their behavior.

Keywords: Antitrust, Consumer Welfare, Sustainability

JEL Classification: A13, K21, K32

Suggested Citation

Thomas, Stefan and Inderst, Roman, Reflective Willingness to Pay: Preferences for Sustainable Consumption in a Consumer Welfare Analysis (July 05, 2021). LawFin Working Paper No. 14, Available at SSRN: https://ssrn.com/abstract=3755806 or http://dx.doi.org/10.2139/ssrn.3755806

Stefan Thomas (Contact Author)

University of Tuebingen - Faculty of Law ( email )

Geschwister Scholl Platz
Tuebingen, 72074
Germany
0049-7071-29-72556 (Phone)
0049-7071-29-2105 (Fax)

HOME PAGE: http://www.jura.uni-tuebingen.de/professoren_und_dozenten/thomas

Roman Inderst

Goethe University Frankfurt ( email )

Theodor-W.-Adorno-Platz 3
Frankfurt am Main, Hessen 60629
Germany
+49 (69) 798-34601 (Phone)
+49 (69) 798-35000 (Fax)

HOME PAGE: http://www.wiwi.uni-frankfurt.de/en/departments/finance/lehrstuhl/prof-dr-roman-inderst/team

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