Decomposition of the organic label effect into absolute and relative effects

What is it about?

The article shows that the organic label effect is actually a co-occurrence of two effects. The appearance of an organic label on a(n organic) product will not only change the consumer perception of that product, but consumers will also change their evaluation of the other products that have been left without a label. The study terms those two effects an absolute organic labeling effects (AOLE) because labeling, or lack of labeling, changes the evaluation of a good compared to the previous consumer evaluation of the same product. The absolute effect on an organic labeled product (AOLEO) and the absolute effect on an unlabeled product (AOLEN) together give the relative organic label effect (ROLE), which in turn shows how labeling changes the relative evaluation of the labeled and non-labeled products compared to each other: in other words, that is the change in the difference between the two products’ evaluations caused by the organic labeling. The study presents these effects on examples from the literature. It also highlights that in the current empirical literature, both AOLEO and ROLE measurements appear frequently, but without being unaware about their differences. The 82 studies examined in the current study are therefore grouped according to which organic label effect was measured.

Featured Image