Research
Working Papers
Transparency of Carbon-Neutral Labels: Evidence from a Choice Experiment (Job Market Paper)
Abstract:
This paper examines the effect of transparency in carbon-neutral labeling on consumer willingness to pay. Carbon-neutral labels indicate that a product's CO2 emissions have been offset (compensated) outside the company and/or directly reduced within it. Although CO2 offsets are generally viewed 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 on carbon-neutral labels and explores consumers' valuation of CO2 reductions versus CO2 offsets. Using a discrete choice experiment survey among UK tea consumers, I compare willingness to pay for standard versus transparent carbon-neutral labels. The control group saw a standard label without information about the breakdown of CO2 offsetting and reduction, while the first treatment group saw a transparent label showing 95% CO2 offsetting and 5% CO2 reduction, and the second treatment group saw a label with a 50%-50% split. The findings show no evidence of willingness to pay for transparency on carbon-neutral labels or preference for CO2 reductions over CO2 offsets. [Link to pre-registration]
Demand for Carbon-Neutral Products with Stefano Carattini, Fabian Dvorak, and Ivana Logar
Abstract:
Corporate social responsibility and the private provision of (global) public goods are of key interest to economists and policymakers alike. Increasingly, private companies are making their operations carbon neutral, often leading their own products to also be certified accordingly. It is an empirical question how consumers value carbon-neutral products and how informed they are about them, which we address as follows. First, we provide a meta-analysis of the literature analyzing demand for products with carbon-neutral labels, based on an overall sample of 26,547 participants. In this analysis, the focus is on average willingness to pay for carbon reductions as well as on the characteristics of the underlying literature, including the use of stated preferences and population samples, and their association with willingness to pay. Second, we leverage information on prices and product characteristics from one of the largest online marketplaces, Amazon's, to infer from revealed preferences on consumers' valuation of carbon-neutral products, through a hedonic approach. 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, which is mainly based on survey studies, suggests a positive willingness to pay for carbon neutrality of products that exceeds most estimates of the social cost of carbon. However, this finding is not supported by the hedonic approach, which is based on market prices, where we do not find evidence for a positive willingness to pay for carbon neutrality for a wide range of products sold on Amazon.
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.