Consumer Demand for Ethical Products and the Role of Cultural Worldviews: The Case of Direct-Trade Coffee

Ethically-labeled products – those that address environmental and human-welfare issues – are increasingly prevalent in consumer decision-making. This research estimates the value consumers place on direct trade coffee, a relatively new and complex ethical product. Direct trade coffee is defined by having three attributes that differentiate it from standard coffee: (i) price premiums are paid directly to farmers; (ii) harvesting practices are sustainable; and (iii) the quality of the product is enhanced. The first two attributes of direct trade coffee lead to social benefits while the third is strictly a private benefit. Using a discrete choice experiment, we find that consumers are willing to pay significant premiums for each of the three attributes and are willing to pay slightly more for those attributes with social benefits. We also find evidence that consumers’ willingness to pay for different attributes of an ethical product varies significantly based on their cultural worldviews.