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How much do you think the sentence “All profits will go to charity” can influence your decisions and purchase behavior?
In the last years, we have witnessed a considerable increase of socially responsible actions from companies all over the world.
Have you ever wondered why?
We, as consumers, therefore irrational beings, tend to perceive the products from companies that make a social effort as superior to those that do not adopt this kind of policy.
This evaluation error is caused by the Noble Edge Effect, or charity effect.
This effect is able to modify our purchase behavior so much so that we prefer the grocery store which is distant 15 minutes by car, rather than the one on our street, if the former claims that they donate part of their profits to some charity company.
If, one one hand, this effect has its pros, as it leads to an increase in donations and paying more attention to suppliers, on the other it can lead to evaluation errors that cannot be considered insignificant.
The Noble Edge effect is strictly tied to the halo effect: the phenomenon makes it possible for the first positive impression of a single trait of an individual, object, or product to influence in a positive way the evaluation of other traits that are not connected to the trait originally evaluated. In other words, the evaluation of a single item influences the evaluation of other elements, affecting the final judgment.
As suggested by researchers Alexander Chernev and Sean Blair, we tend to perceived in a more positive way products from companies that are socially invested, when compared to those who do not adopt this policy, and consequently buy them more frequently, and paying more for them: 53% of consumers involved in the study claimed that they would pay 10% more for products of companies that are socially responsible.
Why it happens
This occurs because we tend to lean more on heuristics and biases when we are in uncertain situations.
Specifically, it is more probable to fall victim to the halo effect in the formulation of judgments on the quality of products sold in a store when we have no familiarity with that type of product. To make an example that everyone can understand, our impression of a car dealership that donated a large sum will be influenced only if we don’t know anything about cars.
Contrarily, it is improbable for our behavior to change in regards of the cars that are sold by that specific dealership. When we have at our disposal the necessary knowledge and information to express judgments by ourselves on the quality of a product, we become more resistant to many biases.
Another factor that influences the dangerousness of the Noble Edge effect is tied to the authenticity and sincerity of the donations. If we think that a company is socially invested just to increase profits or improve their reputation, the halo effect and, by extension, the Noble Edge effect will not mislead us, diverting our choices.
Where it all began
Although they did not use the term “Noble Edge effect”, Chernev and Blair propose a detailed description of the bias in their work titled Doing well by doing good: the benevolent halo of Corporate Social Responsibility.
The focus of their study was the halo effect and how it generated the Noble Edge effect. In addition to the presentation of the theory at the base of their concept, they described some experimental studies to show empirical evidence of their hypotheses.
One of the experiments was designed to show how philanthropy from a company induced to develop more positive behaviors towards their products. They asked to the participants of this study to take part in a session of wine tasting, during which they served them red wine in plastic, unmarked cups, together with a sheet with details about the winemaker. Every participant received the same description, but the researchers told some people, in addition, that the winemaker donated 10% of their revenue to the American Heart Association. Participants were asked to read the description, taste the wine, then evaluating it on a scale from 1 to 9. Then, they were asked how much they knew about wine in general, again on a scale from 1 to 9, 1 being “very little” and 9 being “a lot”.
The results from this experiment showed consistency with the Noble Edge effect: participants who received information about the charity activities of the winemaker rated the wine they had tasted higher than those who had not received such data.
Another important information emerged from the study was determined by the experience factor. Specifically, participants who rated the knowledge they had about wine as “very little” gave a higher score to the taste, when compared to those that described themselves as great connoisseurs.
Some years ago, canvas shoes became very popular, but it’s difficult to attribute their notoriety just to comfort and style. When the company Toms Shoes was launched on the market, they claimed that, for every pair they sold, another pair would have been donated to a child in need. It is possible the show of social responsibility of Toms contributed to their success: the number of donated shoes went from 10 thousand in the first year to 200 thousand in the second year. In fact, Toms inspired other companies to adopt the approach “buy one, donate one”.
But, at some point, Toms’ reputation was being called into question. Specifically when the donation was considered as disrupting by local economies and not so useful for solving wider problems faced by those who lived in extreme need. The company could have made an effort in another way to offer a concrete help.
How to avoid the Noble Edge effect
The first step is to recognize the existence of biases and our fallacy in letting them persuade us without getting sufficiently informed about social campaigns that several brands advertise little by little towards naïve final users.
We can then adopt a more rational approach. This means that, instead of purchasing automatically, we have to evaluate pros and cons of the product and the company/store beforehand, comparing them with the competitors. The fact that a brand is socially responsible can be a selling point, but if we believe that their products or services leave a lot to be desired, maybe its time to begin looking for alternatives.
Remember this next time an advertisement will touch your good heart. It may not be as it seems!
 Montgomery, M. (2015), What Entrepreneurs Can Learn From the Philanthropic Struggles of TOMS Shoes. Forbes. https://www.forbes.com/sites/mikemontgomery/2015/04/28/how-entrepreneurs-can-avoid-the-philanthropy-pitfalls/#246802d51c38
 Lindström J., TOMS Shoes: Positive and Negative Effects in Developing Countries, Helsinki Metropolia University of Applied Sciences Bachelor of Business Administration European Management https://www.theseus.fi/bitstream/handle/10024/144020/Jasmin_Lindstrom.pdf?sequence=1