Preferences for Ethical Product Components: The Example of Jointly Produced Israeli-Palestinian Peace Products

Over the last decades ethical product attributes have become more and more important in everyday food shopping. Different types of ethical product attributes exist, such as fairly traded, organically produced, environmentally friendly production, and animal friendly production. To date, the main focus in research has been on these ethical product attributes. However, new ethical product components are in need of consideration, like products produced between actors engaged in political conflicts to support their peaceful coexistence. This attribute is called ‘conflict resolution’. This thesis is part of the German Research Foundation (Deutsche-Forschungsgemeinschaft, DFG) founded trilateral project “The Economic Integration of Agriculture in Israel and Palestine”. Amongst others, the project analyzes the potential for economic integration of Agricultural Markets in Israel and the West Bank. The Israeli-Palestinian conflict is one of the longest ongoing conflicts in the Middle-East. Due to this conflict, waves of violence and resulting security measures, Israelis and Palestinians are separated from each other. Therefore, this thesis relates the Israeli-Palestinian conflict to the ethical product attribute ‘conflict resolution’ through analyzing consumers’ preferences for products produced between Israelis and Palestinians, called ‘Peace Products’. The objective of this thesis is to analyze European consumer preferences for jointly produced Israeli-Palestinian Peace Products and to identify factors that influence those preferences. In order to analyze these matters, consumer preferences were studied using choice experiments. Respondents were shown choice cards with three different products for extra virgin olive oil or cherry tomatoes. A no-buy option was included to re-create the situation in a supermarket as closely as possible. Respondents were asked to indicate which of the products they would buy. Each product description was defined as a combination of the attributes: production method (organic/ conventional), four price levels, and origin. The origins were described as Europe (Italy for olive oil, and the Netherlands for cherry tomatoes), Israel, the Palestinian Territories, and Peace Products, (origin of jointly produced in Israel and Palestinian Territories). The Peace Product was introduced to the respondents by the means of the following text: “The examples of food products that you will see below vary in price, production methods and country of origin. A special characteristic is that some of these examples are of so-called Peace Products, which are the result of joint projects that are designed to foster cooperation between farmers from Israel and from the Palestinian Territories. The Palestinian and the Israeli partners in these projects benefit equally from the sales of these Peace Products. The income generated from the sale of these products is used to promote joint Israeli-Palestinian social projects.” The choice experiment was part of an online questionnaire; the data were collected by means of an online panel provider in different European countries during different conflict phases in the Middle East in 2012. In addition to the choice experiment questions concerning socio-demographics and attitudes towards the Israeli-Palestinian conflict (anti-Semitism, anti-Arabism, hostility against the Palestinian Territories, anti-Zionism and the Middle East conflict) were included in the questionnaire, to study their influences on Peace Product preferences. Two scientific paper make up the core of this dissertation. The first paper investigates general preferences for different product attributes (organic or conventional production and origin), with a special focus on the ethical product attribute ‘conflict resolution’. We use random parameter logit and bootstrap random parameter logit models to estimate willingness to pay in four European countries (Germany, Great Britain, France and Poland). The bootstrap method is used to correct our online sample by generating representative results by gender and age for the surveyed countries. The results of both models are similar, although the bootstrap models generate more significant estimates of socio-demographic effects. Results show that European consumers prefer European products most. However, consumers are willing to pay a significant premium for the Israeli-Palestinian Peace Products compared with products only from Israel or the Palestinian Territories. Furthermore, the influences of the socio-demographic variables age, gender, education, and income on Peace Products are investigated, and influences differ by survey country. Generally speaking in our choice experiment young, well-educated males with high incomes display higher willingness to pay for Peace Products, but these results do very across the survey countries. The second paper analyzes the influence of question order (validity) on stated Peace Product preferences in Germany. We manipulate the question context by presenting the anti-Semitic and anti-Arabic attitude questions before or after the actual choice experiment. Additionally, the temporal stability of stated Peace Product preferences is investigated by presenting the same questionnaires, ten months after the first sample was collected, shortly after an Israeli Defense Force operation in the Gaza Strip was under-way as a response to Palestinian Rocket attacks (‘Operation Pillar of Cloud’). Data are analyzed by means of an error component logit model. The results show a positive effect on the Peace Product preference if anti-Semitic and anti-Arabic attitudes are surveyed before the choice experiment. A negative effect from the violent dispute is found on stated preferences for products from Israel or the Palestinian Territories if attitudes are surveyed after the choice experiment. Overall preferences for Peace Products are found to be fairly stable over time. In summary, the results presented in this thesis show that respondents in Europe are willing to pay for the ethical product attribute of ‘conflict resolution’. The willingness to pay for Peace Products is influenced by socio-demographic variables, and by whether anti-Semitic and anti-Arabic attitudes are surveyed before or after the choice experiment. The results can be used by politicians and marketers to support and implement Peace Product production. Additionally, researchers should be aware about the context effect when implementing stated preference studies