Big Ideas from a Small World

Steven D. Levitt asks – How Much Is 100sq of Rainforest Worth?

Posted in Method to the Madness by Ryan Thomas on March 15, 2009

The following is an excerpt by Steven D. Levitt about the Tropicana orange juice promotion to save 100 square feet of rain forest.

Via the New York Times:

The most remarkable thing of all is that even after we figured out that the rain forest we saved would only cost 11 cents, we still felt good about the fact that there was this little patch of land as big as the room we were eating breakfast in that we had saved.

I think the key message here is that even small acts can make huge differences. As the economy rights itself this is a nice gesture that helps loyal consumers feel like they are doing something good, even during a time when budgets are tight.

Personally I like it.

Though it did get me thinking about another company that gave something small away and got big results in return.

The Quaker Oats Great Klondike Big Inch!

If you have not have heard of this, shame on you it is a classic Canadian campaign.

klondikebiginch1

klondikebiginch2

Click here for more information on this classic peice of advertising history.

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One Response

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  1. Ryan Thomas said, on March 15, 2009 at 8:01 pm

    The whole article just in case it’s behind the subscription wall by the time you read this.

    Saving the Rain Forest One Glass of Orange Juice at a Time
    By Steven D. Levitt

    I was drinking Tropicana orange juice this morning. The company has a clever marketing campaign. If you go to its website and type in the code on the Tropicana carton, Tropicana will set aside 100 square feet of rain forest to preserve on your behalf.

    What’s clever about this?

    “Whenever a company can give away something worth 11 cents that people think is worth $5, they are doing something right.”

    I think corporations do not exploit the opportunities to bundle consumption of their products with contributions to charity as much as they probably should. I have no quantitative evidence on this; it is just a hunch. Typically, though, these sorts of corporate offers come in the form of “We will donate 3 percent of profits to X.” The share of profits is usually small, which doesn’t make the corporation seem generous.

    The beauty of the rain forest offer is that 100 square feet seems like a lot. Once you think about it, it isn’t really much at all, but it sounds big. And if you are used to thinking about prices of land in cities, 100 square feet could be expensive.

    By my rough calculations, where I live it would cost about $130 to buy 100 square feet of land you could build on. Land is cheap in the Amazon, however. Some online sites say that for $100, they will set aside an acre of land in the Amazon for you.

    So probably, the true cost to Tropicana of an acre of Amazon land is half of that, or $50. Given the number of square feet in an acre, I calculate that the land my daughter saved in the Amazon this morning was worth about 11 cents. When I asked my daughter how much she thought the land was worth, she said $20. When I asked my wife, she guessed $5. Whenever a company can give away something worth 11 cents that people think is worth $5, they are doing something right.

    The most remarkable thing of all is that even after we figured out that the rain forest we saved would only cost 11 cents, we still felt good about the fact that there was this little patch of land as big as the room we were eating breakfast in that we had saved.


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