Recently, as the result of a number of fruitful discussions on various aspects of ethical consumption, I got sensitized to the relationships between economic conditions and consumer trend for ethical shopping. In the current as well as a couple of future posts, I will make an effort to get to grips with the economics of ethical consumption. In line with this, today’s discussion focuses on potential effects of recession on consumers’ ethical commitments and practices.
Higher prices of ethical goods are considered a number one barrier to consumer engagement in ethical shopping (PriceWaterhouseCoopers, 2008). Thus, in 2008 a UK survey revealed that just under half of consumers were unable or unwilling to pay extra for more environmentally friendly goods (PriceWaterhouseCoopers, 2008). No wonder that in the lasting period of austerity, consumers’ ethical commitments get seriously challenged by their ever-tightening budgets, making the eternal “values vs. value” dilemma as pressing as never before. Theory suggests different possible effects that a budget crunch may have on consumer commitment to environmentally responsible shopping. On the one hand, limited disposable incomes logically entail lower levels of consumption, leading to reduced ecological and social impacts. Evans (2011), however, maintains that exactly the opposite is likely to happen. According to him, thrift leads to increased rather than decreased consumption levels since the very “art of thrift” implies wiser spending so that more money is left for further acts of consumption. The practice of thrift, he argues, is about spending less while consuming more. Moreover, the life cycle of bargain items is usually shorter (due to lower quality or consumer tendency to easily dispose of cheaper goods) which inevitably locks consumer in a vicious circle of repeated consumption. However, Evans juxtaposes the practice of thrift with frugality, which, being an expression of criticism of frivolousness, excess and waste, places moral restraints on consumption per se and, therefore, lends support to a more sustainable environment. To summarise, while thrift places a restraint on expenditure, frugality constraints consumption, and this crucial difference defines the relationships between each of the two practices and the idea of environmental responsibility. Flatters and Willmott (2009, p. 3) draw a similar conclusion suggesting that economization “dovetails” well with green consumerism, although no crucial distinction between thrift and frugality is being made here. Others, however, strongly argue against frugality as an effective sustainability strategy. Alcott (2007), for example, maintains that a decrease in demand would force prices to fall which, in turn, would result in increased consumption by the less well-off, thus leaving the overall consumption levels unchanged. Moreover, Pepper, Jackson and Uzzel’s (2009) consumer survey suggests that frugality is born out of income constraints rather than environmental concerns which leaves ecological and social commitments of frugal consumers under a big question mark.
Turning from theory to practice, consumer engagement in ethical buying was commonly predicted to experience a noticeable decline under the growing financial pressures (PriceWaterhouseCoopers, 2008). Flatters and Willmott (2009) forecast that consumer trends for both ethical consumption and green consumption (n.b. neither term is clearly defined in an article so the difference is a bit vague) to slowdown and only gradually recover in a post-recession period. Evidence, however, suggests a brighter future for ethical consumption. The most recent Ethical Consumer Markets Report (Co-operative, 2012) reveals that since the start of the recession in 2008, the total value of ethical markets (comprising of food, household goods, eco-travel and ethical ﬁnance) has actually grown from £35.5bn to £47.2bn. Whether this is explained by the fact that ethical consumers are less price-responsive (as Arnot et al.’s study (2006) suggests) and hold strongly to values beyond economic calculations, or by the fact that ethical goods are mainly consumed by those whose budgets are more resilient to economic downturn, it seems like ethical consumption is more or less recession-proof (different sectors do differently and the sales of organic produce, for example, have declined (PriceWaterhouseCoopers, 2008)). How long will consumers be able to “sustain values while seeking value” (Carrigan and Pelsmacker, 2009, p. 675), remains to be seen.
Alcott, B. (2008). The sufficiency strategy: Would rich-world frugality lower environmental impact?. Ecological Economics, 64(4), 770-786.
Arnot, C., Boxall, P. C., & Cash, S. B. (2006). Do ethical consumers care about price? A revealed preference analysis of fair trade coffee purchases. Canadian Journal of Agricultural Economics/Revue canadienne d’agroeconomie, 54(4), 555-565.
Carrigan, M., & De Pelsmacker, P. (2009). Will ethical consumers sustain their values in the global credit crunch? International Marketing Review, 26(6), 674-687.
Evans, D. (2011). Thrifty, green or frugal: reflections on sustainable consumption in a changing economic climate. Geoforum, 42(5), 550-557.
Flatters, P., & Willmott, M. (2009). Understanding the post-recession consumer. Harvard Business Review, 87(7-8), 106-12.
Pepper, M., Jackson, T., & Uzzell, D. (2009). An examination of the values that motivate socially conscious and frugal consumer behaviours. International Journal of Consumer Studies, 33(2), 126-136.
PriceWaterhouseCoopers. (2008). Sustainability: Are Consumers Buying It? PriceWaterhouseCoopers, London.
The Co-operative Group (2012) Ethical Consumer Markets Report. [Online] [Accessed on 6 January 2014] Available from http://www.ethicalconsumer.org/portals/0/downloads/ethical-consumer-markets-report-2012.pdf