Is Virtue Signaling Worth It for Businesses? We Analyzed 81,799 Airbnb Listings to Find Out

Next time you’re browsing Airbnb listings, you may find that there’s more to consider than just amenities and price.

Stand out from the competitionSome Airbnb hosts tout their personal values—such as honesty, empathy, and conscientiousness—in their listings. This type of pitch has been dubbed “virtue signaling.” While the term can be derisive, we employ it here as a neutral description of a business tactic: Virtue signaling occurs when a business entity communicates to its target audience that it has a purpose beyond providing a service in order to make a profit.

Virtue signaling is not a new phenomenonbut it is still a challenge for entrepreneurs. After all, it is thin line between maintaining valuable dialogue and telling customers what they want to hear. Previous studies on business and virtue signaling is largely mixedand scientists focused mainly on how investors – not consumers – react to this.

As professors who are studying enterpriseWe wanted to better understand how consumers respond to virtue signaling—specifically, whether it makes them willing to pay more in the sharing economy. So we analyzed the language used in more than 80,000 Airbnb listings. We found that virtue signaling does indeed prompt people to pay a premium—but only up to a point.

Virtue Signaling in the Sharing Economy

Airbnb is the largest provider of accommodation in the sharing economy, with over 2 million lively listings in the U.S. Hosts – or Airbnb tourism entrepreneursas the company likes to describe them – they list private rooms, apartments or entire homes along with descriptions of the properties that guests can rent.

Airbnb provides hosts with an wise pricing tool that calculates the nightly rental price based on factors such as the property’s location and amenities. However, hosts can charge more than Airbnb’s pricing tool recommends. To convince guests to pay a higher rental priceHosts often include additional, more personal information in their property listings.

To understand whether this pays off, we analyzed 81,799 Airbnb listing descriptions in 12 cities across the U.S. We calculated the percentage of virtue language using word lists that span six dimensions of virtue: conscientiousness, courage, empathy, honesty, warmth and enthusiasmFor example, hosts might describe their space as “genial” or “neighborly” to convey warmth, or comment on their “supportive” or “compassionate” nature to show empathy for potential guests.

Our findings, published in a leading business journal, reveal that the price hosts can charge for their Airbnb is under the influence of the number of virtue signals on their list.

We found that lower levels of virtue signaling in Airbnb listings support hosts secure more bookings at a higher price, while too much hurts business. Specifically, a host who uses some virtue signaling earns an average of $1,098 more than the average host in our sample each year. Meanwhile, excessive virtue signaling results in a loss of more than $4,964.

So why are people less willing to pay a higher price to Airbnb hosts who extol their virtues the most?

We believe it all comes down to trust. Consumers perceive a little virtue signaling as reasonable and trustworthy. However, higher levels of virtue signaling can be perceived as dishonest. We found support for this idea in a survey experiment with almost 500 participants. In that experiment, we found that Airbnb listings with a lot of virtue signaling were more likely to be perceived as dishonest by the study participants.

Given the challenges that businesses face in communicating their values ​​and beliefs to consumers, our research shows that communicating a moderate dose of virtue can improve consumer outcomes.

What about Airbnb superhosts?

Perhaps the most critical status symbol on Airbnb is Superhost Badgewhich hosts earn over time based on their overall rating, response rate, and other quality metrics. This badge confirms the good reputation of the host and is displayed prominently on property listings.

Our findings show that the virtue signaling effect is stronger for Airbnb Superhosts. In other words, a little virtue signaling paid off more for Superhosts, but too much virtue signaling hurt them more.

These results show that customers respond very differently to Airbnb Superhosts’ positive-signaling behavior, and illustrate that such hosts should be especially careful when using such language in their listings.

Navigating the Political Minefield

Airbnb hosts, like other entrepreneurs, should also consider the political context in which they operate. Research in Political Psychology showed that conservatives and liberals are different when making values-based decisions.

Our results show that hosts with listings in conservative counties experience stronger responses to virtue signals from consumers. We suspect that this is because conservatives believe that it is unfair to overemphasize one’s ethical nature, whereas liberals see this as a function of the business environment in which Airbnb hosts compete. These results suggest that businesses should be especially careful when using virtue language in more conservative counties.

Understanding how consumers respond to displays of value is critical, especially in the sharing economy. Our research suggests that when it comes to public displays of virtue, a little goes a long way.