Applied Statistics - Michael Hiscox and Nicholas Smyth 

 Today, the Applied Statistics Workshop will present a talk by Michael Hiscox and Nicholas Smyth of the Harvard Government Department. Professor Hiscox received his Ph.D from Harvard in 1997 and taught at the University of California at San Diego before returning to Harvard in 2001.  His research interests focus on political economy and international trade, and his first book,   International Trade and Political Conflict , won the Riker Prize for the best book in political economy in 2001.  Nicholas Smyth is a senior in Harvard College concentrating in Government.  He is an Undergraduate Scholar in the Institute for Quantitative Social Science.  Hiscox and Smyth will present a paper entitled " Is There Consumer Demand for Improved Labor Standards? Evidence from Field Experiments in Social Labeling ," based on joint research conducted this summer with the support of IQSS.   The presentation will be at noon on Wednesday, December 7 in Room N354, CGIS North, 1737 Cambridge St. Lunch will be provided. The abstract of the paper follows on the jump: 


 
A majority of surveyed consumers say they would be willing to pay extra for products made under good working conditions abroad rather than in sweatshops. But as yet there is no clear evidence that enough consumers would actually behave in this fashion, and pay a high enough premium, to make “social labeling? profitable for firms. Without clear evidence along these lines, firms and other actors (including independent groups that monitor and certify standards) may be unwilling to take a risk and invest in labeling. We provide new evidence on consumer behavior from experiments conducted in a major retail store in New York City. Sales rose dramatically for items labeled as being made under good labor standards, and demand for these products was very inelastic for price increases of up to 20% above baseline (unlabeled) levels. Estimated elasticities of demand for labeled towels, for example, ranged between -0.36 and -1.78. Given the observed demand for labor standards, it appears that many retailers could raise their profits by switching to labeled goods. If adopted by a large number of firms, this type
of labeling strategy has the potential to markedly improve working conditions in developing nations without slowing trade, investment, and growth.