Does ‘virtue signaling’ pay off for entrepreneurs? We studied 80,000 Airbnb listings to find out

The next time you’re searching through Airbnb listings, you may find there’s more to consider than just amenities and price.

To stand out from the competition, some Airbnb hosts tout their personal values – such as integrity, empathy and conscientiousness – in listings for their properties. This sort of display has been called “virtue signaling.” Although the phrase can be derisive, we’re using it here as a neutral description of a business tactic: Virtue signaling happens when a business entity communicates to a target audience that it has a purpose beyond providing a service for profit.

Virtue signaling isn’t a new phenomenon, but it’s still a challenging one for entrepreneurs to navigate. After all, there’s a thin line between having a meaningful dialogue about values and telling customers what they want to hear. Prior research on business and virtue signaling is largely mixed, and scholars have mostly focused on how investors – not consumers – respond to it.

As professors who study entrepreneurship, we wanted to better understand how consumers respond to virtue language – specifically, whether it makes them willing to pay more in the sharing economy. So we examined the language used in more than 80,000 Airbnb listings. We found that virtue signaling does move people to pay a premium – but only to a degree.

Virtue signaling in the sharing economy

Airbnb is the largest accommodations provider in the sharing economy, with more than 2 million active U.S. listings. Hosts – or Airbnb tourism entrepreneurs, as the company likes to describe them – list their private rooms, apartments or full houses with descriptions about the property for guests to rent.

Airbnb provides hosts with a smart-pricing tool that calculates a rental price per night based on things such as a property’s location and amenities. However, hosts can charge more than the Airbnb pricing tool recommends. To persuade guests to pay a premium for their rental, hosts often provide additional, more personal information in their pitch about the property.

To understand whether this pays off, we analyzed 81,799 Airbnb listing descriptions in 12 cities across the United States. We calculated the percentage of virtue language using word lists that capture six dimensions of virtue: conscientiousness, courage, empathy, integrity, warmth and zeal. For example, hosts may describe their space as “friendly” or “neighborly” to emphasize warmth, or comment on their “supportive” or “compassionate” nature to show empathy with potential guests.

Our findings, published in one of the leading entrepreneurship journals, reveal that the price that hosts can demand for their Airbnb is influenced by the amount of virtue signaling in their listing.

We found that lower levels of virtue signaling in Airbnb listings help hosts secure more bookings at a price premium, while too much hurts Business. Specifically, a host who uses a little bit of virtue language earns an average of US$1,098 more than the average host in our sample each year. At the same time, excessive virtue language results in a loss of more than US$4,964.

So why are people less willing to pay a premium to the Airbnb hosts who espouse their virtues the most?

We think it comes down to trust. Consumers view a little bit of virtue language as reasonable and trustworthy. Higher levels of virtue signaling, however, can come across as dishonest. We found support for this idea in a follow-up survey experiment involving almost 500 participants. In this experiment, we found that Airbnb listings with a lot of virtue language were more likely to be perceived as dishonest by study participants.

As entrepreneurs grapple with how to communicate their values and beliefs to consumers, our research supports that communicating a modest amount of virtue can boost performance with consumers.

What about Airbnb Superhosts?

Perhaps the most important status symbol on Airbnb is the Superhost badge, which hosts earn over time based on their overall rating, response rate and other quality metrics. The badge attests to a host’s good reputation and is prominently featured on property listings.

Our findings show that the effect of virtue signaling is stronger for Airbnb Superhosts. In other words, a little bit of virtue language paid off more significantly for Superhosts, but excessive virtue signaling hurt them more.

These findings show that customers react substantially differently to virtue signaling by Airbnb Superhosts and illustrate that such hosts should be extra careful with such language in their listings.

Navigating the political minefield

Airbnb hosts, like other entrepreneurs, would also be wise to consider the political context they’re operating in. Research in political psychology has shown that conservatives and liberals differ when making value-laden decisions.

Our results show that hosts with listings in conservative-leaning counties experience stronger reactions to virtue signaling from consumers. We suspect this is because conservatives think overstating one’s ethical nature is dishonest, while liberals perceive it to be a function of the business environment in which Airbnb hosts compete. These findings illustrate that entrepreneurs should be extra careful using virtue language in more conservative counties.

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