FOOD LABELLING AND WILLINGNESS TO PAY

Food Labelling and Willingness to Pay

Abstract

Contingent valuation (CV), choice experiment (CE) and experimental auction (EA) or the combinations of the three methods are often used by researchers to elicit consumer willingness to pay for food attributes (food labels). One concern about using these approaches is that quality attributes of food provided to respondents are assumed independent of other attributes which are not provided to respondents during the survey. The limited attributes provided in a survey may lead respondents to allocate their budgets to those limited attributes rather than allocate their budgets to a larger number of product attributes to truly reveal their preferences. Surveys containing a series of online CEs were collected to investigate the effects of additional beef steak attributes on consumer WTP in two different EU & U.K markets. Random parameters logit models are estimated for each CE in the questionnaires with survey results from both samples. The models with the different survey samples reveal consistent results regarding changes in WTP with more attributes added to the CEs. Consumer WTP for the most important attributes in the CE decreases when the number of attributes increases from three to four, while the WTP for the most important attributes increases when the number of attribute increase from four to five. The changes in the WTP for attributes depend on their relationships with the newly added attributes to the CEs and the number of attributes in CEs.

Table of Content

Chapter 1: Introduction5

Which foods are covered by the guidelines?5

Consumer Willingness-to-Pay6

Objectives of the study7

Chapter 2: Literature Review8

Consumer behaviour analysis8

Model of Buyer Behaviour9

Demographics and personal choices9

Consumer attitude9

Consumer motivations10

Summary10

Chapter 3: Methodology12

The consumer survey12

Respondents14

Appendix18

Chapter 1: Introduction

Consumers are becoming increasingly concerned with the quality, safety and production attributes of their food. Consumers' concerns with the safety and origin of beef are especially true in light of the recent European and Japanese BSE outbreaks and occurrences of E-coli 0157:H7 in U.S. beef. The origin and processes used to produce beef products are not apparent to the consumer through experience, consumption, or visual inspection of the product. Therefore, without additional information, consumers cannot differentiate the origin or processes used to produce the beef products they purchase. Production attributes that may be valued by consumers, such as country-of-origin are considered to be credence characteristics. Truthful labeling of credence characteristics allows the consumer to judge the product before purchasing.

Which foods are covered by the guidelines?

Consumers increasingly repeat that they need information in order to make rational choices in the food market. Food labelling is one medium by which consumers can acquire knowledge about the food they consider buying. However, in order to be useful, the information must deal with those aspects which are of most concern to the consumers, and it should be formulated in such a way that they can understand and use it.

Earlier studies have shown that there are large demographic and socio-economic differences with regard to the use of food labels (Fife-Shaw, 2000, 167). Women, the highly educated and those who are on ...