Improving Eco-labelling as an Environmental Policy Instrument: Knowledge, Trust and Organic Consumption

Abstract

Eco-labels have an import role in promoting green consumption since most eco-labelled products are credence goods, implying that the valued process attributes they contain are not observable to the consumer even after purchase or consumption. Therefore, the consumers rely heavily on eco-labels as a reassurance that these attributes are actually delivered. We argue that the label will only have the desired effect if the consumers know the production standards underpinning it and have trust in the label. We test this argument using organic food as our example. The empirical results obtained on the basis of our analysis of Danish purchasing data on actual purchases combined with detailed survey data show that the higher the level of knowledge of labelling attributes and the higher the degree of trust in the label, the more likely consumers are to buy organic food.

Key Words:

• Eco-labelling
• organic food
• trust
• knowledge

Acknowledgements

The authors thank the editor and two anonymous reviewers of this journal for helpful comments.

Funding

The financial support of ICROFS (DARCOF III) is appreciated.

Notes

1 This relationship may not be uni-directional. Consumers who value buying eco-labelled products as a means of promoting environmental protection (or for other reasons) might make a bigger effort to obtain better knowledge of the standards underpinning a specific label.

2 The panel participants recorded the European Article Number (EAN) code of the product along with the price, the volume and whether the food was organic or conventional. In most cases, GfK ConsumerTracking Scandinavia can use the EAN codes to confirm the organic status recorded by the consumer. The consumers knew that the data would be anonymized, and that the data were used for a variety of purposes, not primarily for studies of organic consumption. The panel participants, therefore, had very little study-induced incentive to exaggerate their consumption of organic food.

3 In the definition of the organic budget share we only include types of food which can be defined as organic in the sample.

4 The questionnaire was issued as part of the ICROFS III project CONCEPTS. For further information on the questionnaire see Andersen (2009).

5 We use the largest absolute correlation for a variable with any other variable as the communality estimate for the variable (PRIORS=MAX in the PROC FACTOR procedure).

6 Organic is called ‘Økologisk' in Danish and the organic label is usually referred to as the Ø-label.

7 The literature shows clearly that information overload and negative attitudes might prevent consumers from acquiring and processing new information (for a review see Verbeke, 2005, for newer references see e.g. Bawden & Robinson, 2009; Smed & Andersen, 2012). The three items used to construct the ‘adaptability' variable are all expressions that indicate consumers' attitudes towards new food information and we expect a positive correlation between the level of adaptability and the organic budget share. If consumers are willing to respond to information about food, they are more likely to respond to the organic label.

8 Remember that the parameter of a variable such as green_orient cannot be compared directly to the parameter for a factor such as org_quality, because the scales are incomparable. A change of one unit in a factor like org_quality corresponds to a change of one standard deviation, a change of one unit in the attitude variable green_orient means going from one level of agreement to the next level.

9 Using 2013 exchange rates 50,000 Danish kroner correspond to approximately 6700 euro or 8800 US dollars.