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A study in the Wall Street Journal today says "corporate responsibility" is good business.
To a point.
A new study by a pair of Canadian scholars at the University of Western Ontario found that consumers were willing to pay a hefty premium for "ethically produced" coffee and T-shirts in a carefully controlled test.
The study was meant to measure the economic effect of products from companies with "progressive" corporate policies.
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Study subjects were informed of corporate practices like encouraging diversity and a commitment to customer safety; environmentally friendly production and respect for human rights.
The study found consumers were willing to pay a 64 percent premium for "good" coffee, above the price for menace-to-society coffee.
But the difference between products isn't usually that clear.
The study found that "good" coffee fetched only a 17 percent premium over coffee that the consumers knew nothing about.
And then things get really interesting.
The price premium for "good" T-shirts, labeled as 100 percent organic cotton, was found to be only 6 percent above the price for a shirt without any distinction. But the premium price difference between a 100 percent organic shirt and a 25 percent organic shirt is a measly 2 percent.
The bottom line: it pays to be good, but it looks like you only have to be a little good to be paid.
