Research

Working Papers

Transparency of carbon-neutral labels: evidence from a choice experiment (job market paper)

[Link to pre-registration]

Abstract: This paper examines the effect of transparency in carbon-neutral labeling on consumers’ willingness to pay. Carbon-neutral labels indicate that a product’s greenhouse gas emissions have been offset (compensated) outside the company and/or directly reduced within it. Although expert assessments view CO₂ offsets as less effective than CO₂ reductions, most labels on the market lack transparency regarding the proportion of CO₂ offset and CO₂ reduction. This study empirically investigates whether consumers are willing to pay for transparency in carbon-neutral labels by disclosing the shares of CO₂ offset and CO₂ reduction. Using a discrete choice experiment survey among UK tea consumers, I compare the willingness to pay for standard versus transparent carbon-neutral labels. The control group saw a standard carbon-neutral label, while the treatment groups saw transparent labels indicating varying shares of CO₂ offsetting and CO₂ reduction. I find no evidence of consumers’ willingness to pay for transparency on carbon-neutral labels or a preference for CO₂ reductions over CO₂ offsets, indicating a mismatch between expert and consumer valuations. I further find that the presence of organic and ethical trade labels crowds out the marginal value of the carbon-neutral claim, yet does not change the null effect of transparency.

Demand for carbon-neutral products, with Stefano Carattini, Fabian Dvorak, and Ivana Logar, CESifo Working Paper No. 12232 (submitted and presented at the JEEM/REE Workshop on Non-Market Valuation).

Abstract:

Corporate social responsibility and the private provision of (global) public goods are of key interest to economists and policymakers. Over the last few years, many more private companies made their operations carbon neutral. It is an empirical question how consumers value carbon-neutral and low-carbon products, which we address as follows. First, we provide a meta-analysis of the literature. We analyze consumers' demand for carbon-neutral and low-carbon products, based on an overall sample of 29,666 participants. The focus is on average willingness to pay for carbon reductions as well as on the characteristics of the underlying literature, which is mainly based on stated preferences and controlled environments. Second, we leverage information on prices and product characteristics from one of the largest online marketplaces, Amazon's. Using a hedonic approach, we infer from revealed preferences on consumers' valuation of carbon-neutral products. The staggered process of carbon-neutral certification leads to a series of quasi-natural experiments, which we use for identification purposes. We find that the literature suggests a positive willingness to pay for carbon reductions that exceeds most estimates of the social cost of carbon. However, this finding is not supported by the hedonic analyses, where we do not find evidence that consumers value carbon neutrality.

Publications Prior to Doctoral Studies

Neyapti, B., and B. Özdemir Oluk. "Fiscal Transfers in Turkey: Do Politics Matter?"Economic Systems 45, no. 3 (2021): 100909.