Intrinsic Motivation in Consumer Demand: the case of Organic Coffee

Classical microeconomic theory predicts that price increases reduce demand, yet empirical evidence suggests that intrinsic motivation and social preferences can lead to deviations from this pattern. This study examines how Italian consumers respond to price variations in organic and non-organic coffee, focusing on the role of intrinsic motivation. Using scanner data on Italian consumers from the Nielsen Household Panel, we estimate price elasticities of demand to assess whether consumer behavior aligns with conventional economic theory or is influenced by social norms. Our estimates of own and cross-price elasticities are consistent with the presence of intrinsic motivation effects, with organic coffee demand being less sensitive to price changes than conventional coffee. Our findings provide insights into how economic incentives interact with intrinsic motivation, offering implications for policy measures aimed at promoting sustainable consumption. While our analysis focuses on coffee, the empirical framework and testable hypotheses can be extended to other markets where ethical and environmental concerns shape consumer choices.