Carbon labeling is a wash, detergent study finds

Harnessing people’s environmental good intentions is easier said than done, according to a new study evaluating the effectiveness of a carbon-footprint label that has been applied to thousands of products in the UK and, in slightly different form, throughout Europe.

The logic behind the study goes like this: if consumers value low-carbon products they will be willing to pay more for them. Thus, the price of carbon-labeled items should increase relative to other similar, non-labeled items in a category.

In theory, anyway. To test whether the label actually has an effect on prices in practice, researchers analyzed two years’ worth of data on laundry detergent purchases by 60,000 shoppers at a major UK supermarket chain. It is one of the first studies and the largest one yet to use real-world data to evaluate the success of such labels.

The label in question, designed by the UK’s Carbon Trust Fund, indicates the grams of carbon dioxide emissions that a product generates over its life cycle. It also includes information about emissions of a similar product in the same category, and states that the manufacturer is working to reduce carbon emissions associated with the product.

The supermarket chain adopted this carbon-footprint label in 2008, about mid-way through the study. It has 43 different laundry detergents on offer, and 5 of them, all store-brand options, carry the label.

First, the researchers compared the price trajectories of labeled and unlabeled detergents to see whether consumers’ willingness to pay for environmentally friendly products yields a price premium for labeled detergents. It doesn’t, they reported yesterday in the journal Economic Inquiry.

They conducted a second analysis comparing each of the five carbon-labeled detergents to a made-up product with similar characteristics. This method can better account for the fact that prices might increase for low-carbon products but decrease for high-carbon ones. This analysis, too, showed that the carbon label doesn’t have much effect on detergent prices.

One more try: the researchers analyzed whether sales of carbon-labeled detergents increased after the introduction of the label. But, yet again, they found that the label doesn’t increase detergent demand.

The findings aren’t that difficult to understand once you look at the carbon-footprint label, the researchers say. The label is complex, and it doesn’t indicate whether or not a given level of carbon emissions qualifies as environmentally friendly. “We think that the most plausible explanation for our results is that customers find it difficult to notice, understand, and compare carbon footprints of different detergents and therefore do not reward carbon-labeled or less carbon intensive products with a price premium,” they write.

The findings are consistent with other studies showing that simpler labels are more apt to influence consumer behavior. A carbon labeling system that boils down a product’s impact to a rating of stars, colors like a traffic light, or letter grades might be more effective, the researchers suggest.

On the other hand, complying with such a scheme is likely to be more burdensome on manufacturers, so they might be less inclined to participate in it.

This is all a bit discomfiting if you are a consumer, as it might suggest that consumers either can’t be bothered to sort out information about environmental impacts or are, frankly, a bunch of dolts.

But deciding which laundry detergent to buy is only one of dozens of environmentally inflected decisions that consumers make every day. And collectively, the cognitive load of these decisions isn’t trivial.

This fact will be obvious to anyone who has ever eaten at a sushi restaurant with 11 menu pages devoted to the various sustainability labels applied to its ingredients, or stood puzzling over the rules for separating trash, recycling, and compost after lunch and then accidentally deposited trash in the compost bin and compost in the trash bin. (Note: this writer has had both of those experiences within the past week.)

So we agree that in order to get people to change their everyday behavior for environmental good, doing the right thing has to be made seamless and automatic. But the question still remains: how to – and who will – make it so? – Sarah DeWeerdt | October 27, 2015

Source: Kortelainen M. et al. “Effects of carbon reduction labels: evidence from scanner data” Economic Inquiry DOI: 10.1111/ecin.12278 

Header image: A carbon footprint label in a UK supermarket. Credit: gwire via Flickr.

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