Fair farming: Preferences for fair labor certification using four elicitation methods

Andreas Drichoutis, Achilleas Vassilopoulos, Jayson Lusk and Rodolfo Nayga

MPRA Paper from University Library of Munich, Germany

Abstract: High profile cases of exploitative labor practices have increased concerns over agricultural working conditions. However, it is unclear whether and to what extent the public is willing to trade-off fair working conditions for higher prices and food imports. We implement a large-scale survey to uncover Greek consumer preferences for a food labeling system that certifies fair working conditions for the workers employed at all production stages of agricultural production. Empirical findings from several disciplines suggest that results from contingent valuation surveys can be susceptible to hypothetical bias, social desirability bias, and lack of consequentiality. To test these issues, we use the 'cheap talk' method (Kling et al., 2012), Lusk and Norwood's (2009) Inferred Valuation (IV) method and the consequentiality scripts employed in Vossler and Evans (2009) and Vossler and Watson (2013). We also test predictions of reference dependent theory by testing whether framing the valuation question as an 'Equivalent Loss' (EL) differs from classical 'Willingness-to-pay elicitation' (WTP). We collected responses from more than 3,800 consumers in the cities of Athens and Ioannina in Greece. Our results show that neither the cheap talk nor the consequentiality script had any effect on elicited valuations. In contrast, the IV method appears to mitigate social desirability bias. We also find that values elicited under WTP are larger than values elicited under EL, which rejects neoclassical preferences. When social desirability is taken out of our estimates, we find that consumers are willing to pay an average premium of 72 cents/Kg for strawberries with fair labor certification, which is equivalent to 49% of current market prices.

Keywords: fair labor label; willingness to pay; equivalent loss; contingent valuation; inferred valuation; consequentiality; cheap talk; uncertainty scale (search for similar items in EconPapers)
JEL-codes: C83 C93 D12 Q13 (search for similar items in EconPapers)
Date: 2015-03-03
New Economics Papers: this item is included in nep-agr, nep-dcm and nep-exp
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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