The Value of Crowdfunding: Why Consumers Pay a Premium

If you want to see ingenuity at work, take a look through a crowdfunding website's product portal. People are pitching all kinds of ideas for wondrous projects, with your contribution going directly to who needs it, rather than vaguely lining some far-off executive's pockets. We love crowdsourced goods so much, we're more than happy to pay a premium for it — which isn't nothing in this day and age.

Researchers at the University of British Columbia wanted to know more about how and why we're willing to part with more money for crowdfunded products. That team has just released a paper looking into how and why we choose to fund what we do. They discovered something interesting, and hopeful: Crowdfunding tends to make us put our money where our values are.

"Crowdfunding activates feelings of working towards a goal with other people, and … it makes you feel more interconnected with other people," said coauthor Katherine White. "When you're in the that state of mind, you're going to be more responsive to the goals of others — and goals that help others."

In other words, if we know that a crowdfunding project has some element of social good (empowering marginalized groups, using recycled materials, etc), we're more than happy to pitch in a little more. Of course, there's also something in it for us, as consumers, but just because we benefit in some way doesn't also make the gesture generous. The nice thing about looking ethical is that often it can lead you to an actually ethical choice.