Product Labels for the Circular Economy: Are Customers Willing to Pay for Circular?

Abstract

While existing research has probed consumer responses to products of different recirculation pathways (recycling, reuse, refurbishment, etc), little work has examined consumer responses to an explicit “circular economy” product label or how willingness to pay is influenced by a continuum of circularity levels. This paper reports on the results of an online survey experiment that tests whether customers are willing to pay more for products with a theoretical multi-level Circular Economy score. Conjoint analysis was used on 800 respondents in the United Kingdom to test their willingness to pay for mobile phones and robot vacuum cleaners at different levels of circularity alongside other product attribute combinations. Results indicate that the average customer almost always prefers a more “circular” product when compared to products with otherwise identical attributes, and that customers are consistently willing to pay more for products with low or moderate levels of circular content. However, analysis suggests that willingness to pay more for products disappears, and in some cases declines, as the proportion of recirculated content increases. Results offer evidence that applying a numerical circular economy label at low levels of recirculated content could be a profitable strategy for producers of mobile phones and robot vacuum cleaners. Such a strategy is less certain for heavily refurbished products, fully reused products, or other product types.