Are the poor willing to pay a premium for designer labels? a field experiment in Bolivia

This paper provides an empirical test of whether consumers in developing countries who live under conditions of poverty are prepared to pay a premium for products that feature a designer label, not because these are perceived as being of higher quality but for symbolic reasons. For this purpose a field experiment was conducted among urban, low‐income consumers in Bolivia. An incentive‐compatible procedure was used to elicit willingness‐to‐pay for designer brand perfume and an intrinsically equivalent non‐branded perfume. After correcting for possible “quality illusion”, we find that poor consumers, as a group, are willing to pay a premium for the designer label as a symbol. This willingness to pay for a designer logo depends on respondents' relative economic situation, education level and the frequency of watching soaps on television.