Mandatory social label system as a super‐nudge to reduce intention‐behaviour gap and increase responsible consumption

Abstract

AbstractIn this paper I discuss the proposal of a mandatory and internationally recognised system of social labelling as an attempt to at least partially reconcile free trade and democracy, modifying the Rodrik trilemma. A mandatory social labelling system can be seen as a super‐nudge in the sense of Thaler and Sunstein. I argue that only a mandatory social labelling system can do the job. The current voluntary system is structurally unable to increase socially responsible consumption and to power up an endogenous race to the top in labour standards. I analyse the difference between a voluntary and a mandatory labelling system and discuss the advantages of the latter. It emerges that there are reasons to claim that a mandatory system could sharply reduce the intention‐behaviour gap and increase socially responsible consumption, reducing the negative effect of the Rodrick trilemma. A mandatory social labelling system can therefore determine a race to the top in labour regulation, instead of the race to the bottom witnessed in recent decades, with some useful by‐products in terms of within‐country income distribution and fostering the democratic process in emerging economies.