The Additional Costs of Organic Food Products – A Basket of Goods-based Analysis Differentiated by Income

Benjamin Held and Christian Haubach

management revue - Socio-Economic Studies, 2017, vol. 28, issue 1, 6-61

Abstract: Sustainable consumption is an urgent issue regarding the rising global environmental pressures. Consequently, sustainable consumption is an important matter for more and more consumers in Germany. But the perception that sustainable consumer goods incur additional costs is a widely mentioned barrier. We have developed a statistical method based on the Laspeyres price index and the product descriptions of the Purchasing Power Parities (PPP) in order to examine the additional costs of organic food products compared to conventional food products. These costs depend on the households’ expenditure structure, so called weighting scheme. Based on Engel´s law, we predict a negative correlation between net equivalent income and the additional costs for organic food products. We verify and quantify this relationship by using income-related weighting schemes. The results show that organic food products are about 80 % more expensive than conventional food products. Furthermore, we find that households cannot afford to purchase solely organic food products without getting into debt when their net equivalent income is below median.

Date: 2017
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DOI: 10.5771/0935-9915-2017-1-6

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