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Ecolabeled paper towels: consumer valuation and expenditure analysis
Arun K Srinivasan1, Glenn C Blomquist
1School of Business, Indiana University Southeast, 4201 Grant Line Road, HH 216M, New Albany, IN 47150, USA. asriniva@ius.edu
Journal of Environmental Management
|December 15, 2007
Summary
Environmentally conscious consumers value ecolabeled paper towels, paying a premium for them. Demand for these sustainable products is inelastic, meaning subsidies won't significantly alter purchasing habits.
Area of Science:
- Environmental Economics
- Consumer Behavior
- Sustainable Product Markets
Background:
- Ecolabeled paper towels utilize post-consumer recycled materials and feature recycle logos.
- Environmentally conscious consumers actively purchase these products to enhance environmental quality.
Purpose of the Study:
- To estimate the implicit value consumers place on ecolabeled paper towels.
- To analyze consumer expenditure patterns for these sustainable products.
Main Methods:
- Utilized a hedonic price function to assess implicit value.
- Employed Heckman's selection model for expenditure analysis.
- Analyzed data from the online grocery platform Peapod.
Main Results:
- Consumers recognize ecolabels on paper towels and are willing to pay a significant price premium.
- Demand for ecolabeled paper towels is inelastic among environmentally conscious consumers.
- Simulations suggest small subsidies will not substantially impact consumer purchase decisions for ecolabeled paper towels.
Conclusions:
- Ecolabels represent a significant value to a segment of consumers.
- Inelastic demand indicates consumer loyalty and commitment to sustainable choices.
- Policy interventions like small subsidies may have limited effectiveness in increasing adoption rates.
