The Price is Right? Product Attachment and Price-Setting in the Sale of Handicraft Products in Southern India

This study investigates the price-setting behavior of artisans and traders in the wood and lacquerware craft cluster of Channapatna in India. Using 8 months of ethnographic data and a field experiment, the paper uncovers the importance of meaningful work in the context of workers facing poverty. The study finds that artisans, despite being poor, provide discounts of about 25% to foreign buyers and about 50% to Indian buyers wearing handicraft products in comparison to a baseline group of Indian buyers. These price patterns are contrasted with similarly disadvantaged, local traders, who retail the same products but instead, demand discernibly higher prices from foreign buyers.

The paper provides an explanation for these contrasting price patterns by highlighting that all workers facing poverty do not experience work identically. Artisans, who craft products with their hands from start to finish, derive meaning from selling to discerning buyers which motivates them to sacrifice profits, while traders, who merely retail these products, focus solely on the monetary gains from sale. This study makes three contributions. First, I advance the literature on meaning of work by building on two determinants of meaning, financial circumstances and task identification, to explain under what conditions, even workers facing poverty will seek meaning through work at the expense of monetary considerations. Second, by combining a field-experimental design with ethnography, the paper provides causal evidence showing that meaningful work has important market implications while ruling out dominant alternative explanations. Finally, this research informs the design of labor-market institutions in developing economies by highlighting the need for more sophisticated models of how low-income workers make sense of their work, beyond theories rooted solely in financial interests.