A Note on Teaching About Fair Trade

Abstract

Principles of economics students are often familiar with the term “fair trade” from product packaging and news stories covering ideological issues related to prices and wages paid to producers in developing countries. Through an informal survey of our economics students, we find ignorance about both free trade and fair trade and confusion over the difference between them, with many students concluding that free trade is not fair or equitable. An examination of 20 recent principles of economics textbooks finds that only two mention fair trade, and one uses the term to refer to resale price maintenance rather than to the social movement. Because the fair trade social movement has strong economic implications, we believe that instructors in principles of economics courses should address the topic, however briefly, to reduce any misunderstandings. This would allow instructors to focus on the economic theory underlying the benefits of free trade.