NYU Stern Study Shows Customers Are Willing to Pay More for Socially Responsible Products
By Russ Winer and Stephanie Tully
Our study shows that retailers can obtain larger price premiums for frequently purchased, non-durable goods that are socially responsible than for durable products.
Many companies have made significant investments in socially responsible products. Environmentally safe cleaning products, fair trade coffee and sustainable seafood are just a few examples. But are today’s cost-conscious consumers willing to pay a premium for those social and environmental benefits? According to a new study from NYU Stern, the answer is yes!
Professor Russ Winer, chair of NYU Stern’s Marketing Department, along with Stern PhD student Stephanie Tully, examine the willingness to pay for socially responsible products in their new paper, "Are People Willing to Pay More for Socially Responsible Products: A Meta-Analysis."
In the largest study of its kind, Winer and Tully examine two dependent variables across 83 research papers – the proportion of people who are willing to pay extra for socially responsibly products (e.g., jeans made from recycled materials) and the percentage premium that people are willing to pay for those goods. They found:
- 60 percent of consumers are willing to pay extra for a socially responsible product.
- On average, those consumers were willing to pay a 17.3 percent premium for goods that provided a social or environmental benefit.
- The percentage premium was slightly lower for socially responsible goods that are durable (e.g., furniture) vs. non-durable (e.g., toilet paper).
- Consumers are willing to pay the highest premium for goods that provide benefits to humans (e.g., good labor practices), followed by purchases that benefit animals (e.g., bigger cages), followed by goods that are environmentally friendly.
Russell Winer is the William H. Joyce Professor of Marketing and Chair of the Marketing Department.