Understanding the “Ethical” Consumer
It is not uncommon to pick up a flyer at your local health food store and be impressed by the veritable tsunami of the reports and surveys espousing the rising tide of “ethical” consumerism. Depending on the report or survey anywhere from 30-80 percent of consumers are throwing off the shackles of product commercialism and embracing the social dimensions of consumption. For example in 2002 LOHAS reported that
… about 30 percent of U.S. adults—more than 63 million consumers—now purchase goods and services with a nod toward the products’ health, environmental, social justice and sustainability value.
Yet, despite this wave of survey radicalism the reality is that a mere fraction of a fraction of products bought and sold on a daily basis fit these characteristics; not the 30 percent that one would expect if the surveys were correct. Indeed, despite surveys like those above implying that people want a healthier and more socially responsible lifestyle the reality is that if anything has exploded since 2002 it has been obesity not social and lifestyle activism. For example, the Center for Disease Control in the US reports that in 2009 approximately 30 percent of Americans were clinically obese.
One might be prepared to write off the disconnection between stated beliefs (or intentions) and actual behaviour as simply part of human nature. Humans lie. Humans cheat. Humans want to look good. Humans are noble and have good intentions.
However, simply writing off what is known as the “attitude-behaviour gap” would be a mistake with costly consequences, for consumers, businesses and society. For example, companies seeking to create more “ethical” products will mistakenly overestimate the willingness of consumers to accept and pay for social components of products. This will have a flow-on effect where potential producers will look on potential future product offerings that are supposedly “demanded” by consumers with suspicion. Consumers will be cynically perceived as “radicals when filling in a survey but economic conservatives at the checkout line” with the consequence that products that should be on the market will potentially not be developed (making consumers worse off) and market opportunities that can be exploited will be left fallow (making firms less profitable). Society as a whole will lose.
What is the way out of this conundrum? Our research reveals a number of fundamental inconvenient truths about “ethical” consumerism. The three most important are: (a) trade-offs matter, (b) context matters, and (c) heterogeneity matters.
First, consumers rarely purchase based upon ethicality (or the social components of the products) but make complex trade-offs amongst the “components” that make up a product or service. Hence, products and services are purchased holistically and must be considered as a mixture of many complex features that appeal differentially to the consumer. However, when functionality and “ethics” are in conflict, ethics will most likely lose out. Hence, although the social dimension of the product or service may be part of the consumer’s decision calculus it will only be a part (and most likely a minor part). Forcing consumers into an ethical dilemma about purchasing defeats the purpose of getting them to purchase a product with “good” social characteristics. The ethics and the functionality of the product or service must fit into a package that appeals to the consumer as a package.
Second, context is critical. It is very difficult to understand an individual’s social preferences without there being tradeoffs, which is what purchasing reveals but surveys do not. For example, what is the cost for me answering a questionnaire falsely by saying that I care about the environment, labour rights, animal welfare and the homeless? The context of the survey is effectively meaningless to the context of purchasing. Hence, market research techniques such as surveys and focus groups are meaningless when it comes to understanding the complexity of social purchasing. Unlike standard product features, where consumers have an incentive to tell the truth about what they want, social product features will lead to a social acceptability bias that renders the market research useless. The only way to resolve this is to utilize true market based experiments that create realistic trade-offs.
Finally, consumers are heterogeneous. They are heterogeneous in terms of both their individual preferences (otherwise everyone would be purchasing the same products) and their social preferences. It is not uncommon—as revealed in the quotation given at the beginning of the article—to believe that there are consumers who want to give “a nod toward the products’ health, environmental, social justice and sustainability value”. But reality is more complex. Our work shows that individuals do not have broad social preferences but are subtle, rational and selective. When there is a “price” to caring about something they choose deliberatively. Some care about the environment. Some care about labour rights. Some care about animals and some about third world debt. But no one cares about everything (as they seem to in surveys).
What our work reveals is that notions of ethical consumerism are mythical. Individuals may be consumers who take into account the social dimensions of the products they buy, but they do so selectively and rationally in the context that they find themselves in when purchasing. They are simply human.