Ecolabels and the economic recession

Jibonayan Raychaudhuri and Ada Wossink

PLOS ONE, 2023, vol. 18, issue 12, 1-27

Abstract: We examine the effect of the 2008 economic recession on consumers’ observed expenditures for eco-labelled grocery products. Traditional price theory predicts that consumers change their spending during an economic downturn and we would expect the sales share of eco-labelled products to fall since these are relatively more expensive than non-labelled products. We use supermarket loyalty card data from the UK and show that the recession had widely different effects on the expenditure share of different eco-labelled grocery products. We confirm, empirically, that expenditure shares on organic products declined over the time period under study but the expenditures share for fair-trade products increased over the same period. We evaluate alternative models of decision making to explain our results, viz., a salience model and a model of reputation signalling. We find that both of these models give a plausible explanation of our empirical results.

Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:plo:pone00:0294167

DOI: 10.1371/journal.pone.0294167

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