That’s the title of a new paper I co-authored with Seon-Woong Kim and Wade Brorsen, which was just published in the Journal of Agricultural and Resource Economics.
We know consumers have a number of motivations for buying organic food - from perceptions about health, taste, safety, and environment to perceptions about impacts on smaller farmers. Whether these perceptions are accurate is debatable. In this paper, we were interested in an all together different motivation: the extent to which consumers feel social pressure to buy organic.
In our study, people made simulated choices between apples or milk cartons, where one of the characteristics was the presence or absence of the organic label. People were divided into one of four groups:
1) The control (CTRL): no manipulation.
2) The eye (EYE) treatment. This is going to sound crazy, but following some previous research, we showed an image of a person’s eyes on the screen as people were making their apple and milk choices. Prior research suggest that exposure to an image of eyes creates the aura of being watched, which increases reputational concerns and cooperative behavior.
3) The name (NAME) treatment. Just prior to the apple/milk choices, people in this group were asked to type in their first name, and we ask them to confirm if they lived in the location associated with their IP address. The idea was to remove the perception of anonymity and increase social pressure.
4) The friend (FRND) treatment. Here we used a vignette approach. Jut prior to the apple/milk choices, people were told, “Now, imagine you are in the specific situation described below. Your good friends have family visiting. They’ve asked you to help out by taking their sibling, whom you’ve never met, to the grocery store. While you’re there with your friend’s sibling, you also need to do some shopping for yourself.”
If social pressure is a driver of organic food purchases, willingness-to-pay for the organic label would be expected to be higher in the EYE, NAME, and FRND treatments relative to the control.
Here are some summary statistics showing the percent of choices made by consumers in each treatment group in which a product with the organic label was chosen.
We see some support for the idea that organic is more likely to be chosen in the social pressure treatments (EYE, NAME, FRND) than the control. The effects are statistically different, but that aren’t huge for every treatment considered. However, the above table doesn’t consider price differences. When we convert the choices into a measure of willingness-to-pay, we find the biggest effect is for the vignette (FRND). For this treatment, we find willingness-to-pay for organic is about 88% higher for apples and 82% higher for milk than the control.
For all groups, we found that education levels moderate the relationship between the social pressure treatment variables and willingness-to-pay for organic. In particular, social pressure is higher for more highly educated consumers. The effect was particularly large in the EYE treatment, where more highly educated consumers valued the organic label between 150% and 200% than less educated consumers when exposed to eyes.
These results provide evidence that at least a portion of organic consumption is likely driven by a form of conspicuous consumption. Some might call it a form of conspicuous conservation, but that’s a whole other can of worms.