From financial cutbacks to ethical trade-offs: exploring the influence of welfare and consumer values on ethical consumption during economic crisis

Purpose This study investigates how perceived economic conditions, materialism and frugality influence ethical purchasing behavior during economic crises triggered by the COVID-19 pandemic and the war in Ukraine. Specifically, we examine whether negative perceptions of past economic situation and actual welfare cutbacks lead to a decline in ethical purchasing. Additionally, we assess the role of consumer values of materialism and frugality. Given the economic and cultural differences between Poland, Hungary and Slovenia, we also analyze cross-country variations in these. Design/methodology/approach We use partial least square structural equation modeling (PLS-SEM) on a representative sample of 1,544 consumers from Poland, Hungary and Slovenia to examine the relationships between economic perceptions, materialism, frugality, welfare cutbacks and ethical consumption. A multi-group analysis (PLS-MGA) is conducted to identify cross-country differences in these dynamics. Findings Findings indicate that consumers who experience less financial strain and fewer welfare cutbacks are more likely to maintain ethical purchasing behavior. However, materialism and frugality weaken the likelihood of continuing ethical consumption. It suggests that while a sense of financial security can sustain ethical commitments, a strong focus on possessions or cost-saving strategies undermines consumers' willingness to pay a premium for ethical goods. Cross-country analyses reveal significant differences in the strength of these relationships: the association between welfare cutbacks and reduced ethical consumption is stronger in Slovenia than in Poland, whereas the effect of negative perceptions of past economic conditions on welfare cutbacks is stronger in Hungary in comparison to Poland. Originality/value The study provides cross-country insights into consumer behavior amid crises focusing on understudied Central and Eastern European countries and explores how and why ethical consumption shifts during financial hardship.