The Role of Behavioral Economics in Providing Sustainable Demand for Eco-Friendly Products

Vladyslav Lazarenko, Roman Hulinchuk and Oleksandr Botsula
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Vladyslav Lazarenko: Institute of Agroecology and Environmental Management of NAAS, Kyiv, Ukraine
Roman Hulinchuk: Institute of Agroecology and Environmental Management of NAAS, Kyiv, Ukraine
Oleksandr Botsula: Institute of Agroecology and Environmental Management of NAAS, Kyiv, Ukraine

Oblik i finansi, 2021, issue 4, 109-114

Abstract: Behavioral economics theory, generated by a change in the established stereotypes of thinking of classical economists, examines processes and phenomena, taking into account psychological factors related to the processes of making irrational decisions by individuals. The purpose of the article is to determine the place and role of the behavioral economics theory in the formation of demand for eco-friendly food products, taking into account physiological primary and environmental needs and other cognitive factors that directly impact consumer behavior in a competitive market. The high degree of influence of irrational factors that are not under the control of the individual on the efficiency of the functioning of a business entity in the markets was revealed. The neoclassical economic and behavioral approaches were compared, and the shortcomings of the neoclassical economic theory and the problems that cannot be solved in practice by the neoclassical approach were identified. But these problems can be solved by using the behavioral approach. It was determined that one of the main economic components in environmentally oriented agriculture is the pricing process, or rather the impossibility of determining a reasonable price for food products. This aspect requires an assessment of rational economic indicators and consumers' level of readiness and ability to respond to changes in market conditions. Motivation significantly influences the choice of consumers in the markets. So, this study reveals the issues of the general motivational theory as part of the behavioral economics theory. Based on the assessment of the motivational aspect, the structural-logical motivational model of behavioral economics in ecologically oriented agriculture was formed; it includes cultural, economic, socio-informational factors.

Keywords: behavioral economics; environmental economics; agriculture; environmentally friendly production; sustainable development; market; consumer behavior (search for similar items in EconPapers)
JEL-codes: A11 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:iaf:journl:y:2021:i:4:p:109-114

DOI: 10.33146/2307-9878-2021-4(94)-109-114

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