According to a recent study of consumer perceptions by Professor of Marketing and Dr. Lonnie Ostrom Chair Andrea C. Morales, how we view the purchase of pro-social products like organic food or electric cars depends on our income, as well as where it comes from. We perceive welfare recipients as being less ethical than their wealthier counterparts when they buy the same pro-social products — a stark asymmetry between rich and poor in the marketplace.
In a grocery store somewhere in the U.S., a customer who earns an annual income of $87,000 decides to buy organic carrots instead of the traditional carrots. With this health-conscious choice, they are supporting environmentally friendly production processes free of harmful pesticides and supporting their health while doing so.
At the same grocery store, another shopper who happens to be a welfare recipient also buys the organic carrots. According to a study published in the Journal of Consumer Research, society views each consumer choice differently. While the high-income earner who buys organic carrots is perceived as making an ethical decision, the welfare recipient is considered less socially virtuous — even though both shoppers make the same purchase.
This dichotomy reveals a stark asymmetry in perceptions of both wealth and welfare in American culture and sheds light on one dimension of the many marketplace challenges facing low-income populations. It also mirrors the great divide between the rich and the poor. While the top one percent in the country is estimated to hold 50 percent of the wealth, nearly half of the population receives some type of direct government assistance. Today, more than 47 million Americans live in poverty, surviving on annual incomes less than $12,000 and many on less than $2 per day.
“The asymmetry in the data surprised us,” says Morales and co-author of, “Wealth and Welfare: Divergent Moral Reactions to Ethical Consumer Choices.” “Part of addressing an issue is first knowing it exists and shedding light on the related implications for corporations and policymakers who can implement change.”
Turning the lens on low-income consumers
There is little research on the consumer practices and perceptions of low-income people. The lack of research in this domain drew the interest of Morales from an academic perspective, but the fact that her father grew up very poor in Laredo, Texas, also gave her a personal interest in the topic.
“My grandmother worked hard to make sure my dad and his brother and sister always had food to eat and clothes to wear, Morales explains. “They never asked for or received any government assistance, but her income level was low enough that they would have been well below the poverty line by today’s standards. The conditions my father’s family faced are all too common, and more research is needed to examine the marketplace challenges low-income consumers face on a daily basis.”
The multi-year study involved 1,300 participants in five separate experiments designed to evaluate their perceptions of shoppers who choose products that benefit society, ranging from organic carrots and cut pineapple to hybrid rental cars. The fundamental differences between the shoppers in the experimental scenarios were annual income (high or low) and source of income (earned or received through government assistance programs).
All five experiments confirmed the finding: When high-income and welfare recipients demonstrate the same shopping habits for pro-social goods, there is a stark difference in how society views each. For example, when a wealthy individual with an earned income of $85,000 makes an ethical shopping choice, they are considered socially virtuous. On the other hand, someone receiving government assistance is viewed as immoral or undeserving of the benefits of such products.
Much of this is rooted in the American cultural expectation for the poor to be thrifty and industrious, in a society where not working hard enough is considered an ethical “lapse.” In other words, those who earn a living through hard work reap the outputs of their effort and “earn” the right to make their spending choices. Those who receive government assistance or someone else’s inputs, on the other hand, may be perceived as lazy, unmotivated, or lacking effort. These perspectives influence judgments about one group being more ethical or deserving than the other.
What’s in your wallet
Are you seen as ethical or not? It depends on what’s in your wallet — and where the money comes from – when buying pro-social products. Is the money earned from a job or diligent effort? Then you will be seen as socially virtuous when you buy the organic cut pineapple or a Prius hybrid car.
On the other hand, is the money received from government assistance? Then you are considered less deserving of the choice to purchase the organic cut pineapple, which is seen as a self-indulgent expenditure.
Even so, consumers’ level of ethical behavior may be evaluated even before the cash register rings. This is worse news for low-income customers since studies show individuals are inclined to judge another’s morality based on income alone before they even make a purchase.
“The fact that someone receives taxpayer money seems to endow others with the right to judge how recipients spend the money,” says Morales. “Welfare recipients are not perceived to have the same purchasing freedom as those with higher incomes.”
The structure of the welfare food stamp program embodies this lack of choice, placing limits on types of items recipients buy, such as prohibiting hot foods cooked in the store, alcoholic beverages, tobacco, and pet food. Many states add organic foods to the prohibited items, even though they are often the healthier choices for customers.
“The welfare recipient may want to make the better choice, the pro-social option, the more ethical choice by buying organic foods, yet the very fact that they receive government assistance limits their ability to acquire those items and overshadows the perceived moral benefit of the purchase,” says Morales.
The price point is the flashpoint
The flashpoint at the heart of the matter is the price. Organic foods tend to be costlier than conventional foods, and some environmentally-friendly hybrid cars may be up to 35 percent more expensive than gas-engine vehicles.
Here is the pain point: When welfare recipients choose higher-priced items, they are often judged to be undeserving of what many consider to be unnecessary luxury items, even if their individual shopping choice benefits society.
When the price is removed, the disparity dissipates. For example, when the price of organic carrots is discounted to match the price of conventional carrots, the study showed that both high-income and welfare consumers are viewed with similar regard — there is little contrast in their perceived morality whether they choose the organic or conventional produce.
The higher price of pro-social products also affects perceptions of organizations that provide food to low-income individuals and families. In one experiment, the study participants were asked if they would donate to a charity that provides organic foods to low-income households; few of them gave, with most saying they viewed the gift as having a lower ethical value than a conventional one due to the higher cost of organic food.
Some companies have taken notice of the price point issue. In 2014, Walmart announced that it was partnering with the brand Wild Oats to provide organic options for customers for a savings of up to 25 percent, then later dissolved the partnership. The company recently announced that it is now working to stock lower-cost organic products on its shelf through its generic store brand to meet the growing customer demands for affordable, healthier foods.
In 2015, the state of California introduced a “Plus-Up” pilot designed to make plug-in hybrids and electric cars more affordable by offering up to $12,000 for the purchase price for households located in disadvantaged areas.
“I hope the study’s findings will continue to spur a changing perception of low-income consumers or those on welfare who buy pro-social items, by informing public policies aimed at alleviating poverty,” says Morales.
American author Herman Melville, writing in 1854, shows that this disparity is not a new one:
“Of all the preposterous assumptions of humanity over humanity, nothing exceeds most of the criticisms made on the habits of the poor by the well-housed, well-warmed, and well-fed.”