Consumer Reactions to, and Valuation of, Changes in Product Quality

NON-TECHNICAL SUMMARY: To appropriately prioritize alternative food quality policies it is necessary to understand how consumers would value stricter food quality standards and alternative food labeling approaches. The proposed research will use various survey datasets to measure the effects of altering food quality, or food quality information, on consumer welfare.

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APPROACH: The proposed research will use various survey datasets to measure the effects of altering food quality, or food quality information, on consumer welfare. A. This project, funded by the Centers for Disease Control (CDC), is designed around several goals. The first goal is to provide empirical estimates of individuals' willingness to pay (WTP) for reductions in the probability of contracting foodborne illnesses and to determine whether WTP varies across pathogens and food products. A second goal is to provide estimate of individuals' willingness to pay for reductions in the probability of contracting specific symptoms associated with such foodborne illnesses. Another goal is to determine if the above WTPs are affected by the amount of information presented to the respondent. A final goal is to further develop the methods used to elicit WTP estimates. The project will used mail survey and virtual shopping technologies to gather the data. B. The goal of this project is to use national survey data, (the 2002 FoodNet Population Survey - collected by CDC) to evaluate the factors that impact food safety values elicited in the FoodNet survey. I will develop an economic model of risk processing appropriate for predicting individuals' willingness to pay for food safety protection. I will then estimate the model with multivariate, limited-dependent, regression techniques to analyze the relationship between the elicited values and the hypothesized factors that would impact these values. C. The goal of this project is to use mail survey techniques to measure consumer reactions to alternative health and environmental labels for genetically modified foods. In the survey, respondents will view different product labels and will be asked to perform a series of tasks designed to measure the performance characteristics of the different labels. We will also use food choice scenarios to measure consumers' willingness to trade-off health and environmental benefits for the use of genetically modified ingredients. A relatively detailed set of preference questions will allow a thorough examination of the factors that influence consumer reactions to these genetically modified foods. Through the use of various statistical techniques, we will be able to determine if different labels caused a choice inconsistent with personal preferences. D. The goal of this project is to use the U.S. Food and Drug Administration's Food Safety Survey to measure consumer reactions to alternative food technologies: irradiation, genetic modification and organic. In the survey, respondents were asked a series of questions to elicit their knowledge of, and attitudes toward these technologies. We will use various statistical techniques (factor analysis, multivariate regression) to determine the factors that influence consumer knowledge and attitudes.<P>

PROGRESS: 2003/10 TO 2008/09<BR>
OUTPUTS: Numbers of requests for research results from industry, policy makers and other stakeholder groups - 14 Number of invitations made by stakeholders to provide public testimony or speak at policy-related or methodological workshops - 21 Invited presentations U.S. Federal Trade Commission Workshop of Eco-cetrification. Washington DC. New England Private Well Water Symposium. Newport, Rhode Island. Swiss Federal Institute of Technology, Institute for Environmental Decisions, Zurich, Switzerland U.S. Environmental Protection Agency New England Headquarters. Boston, MA Centers for Disease Control and Prevention. Atlanta, GA. Market Mechanisms workshop - U.S. Environmental Protection Agency. Washington, DC. Centre for Energy Policy and Technology, Imperial College London, UK. Workshop on eco-labelling. French National Institute for Agricultural Research. Nancy, France. Economics Institute of Zagreb - Croatia. U.S. Environmental Protection Agency Science Forum 2005, Washington DC Maine Organic Farmers and Growers Association. Diet and Nutrition Workshop. Unity ME. Maine Department of Environmental Protection. Environmental and Resource Economics Workshop - Colorado University. Office of food safety workshop on new food technologies. U.S. Food and Drug Association Washington DC Maine Fishermen's Forum Rockland, ME Legislative Task Force on Promoting Maine-Made Products. Augusta, ME The Role of Labeling in the Governance of Global Trade: The Developing Economy Perspective Workshop - Bonn Germany. SOM Workshop on Environment, Information and Consumer Behavior. Frederiksdal, Denmark. New England Society of American Foresters. Burlington VT. Conference on Integrated Fruit Production, Canadian Horticultural Council. Montreal, Canada. Workshop - New Methods for Valuation in Health and Health Care. American Public Health Association. Philadelphia. <BR>PARTICIPANTS: Training/professional development Graduate students supported/trained 2003-05: Caroline Noblet - M.S. - Resource Economics and Policy 2005-07: Joel Johnson - M.S. - Resource Economics and Policy 2006-08: Eleanor Bacani - M.S. - Resource Economics and Policy Undergraduate/Honor's students supported/trained 2004-05: Alice White-Cyr 2005-06: Jack Cohen <BR>TARGET AUDIENCES: The target audiences for this project included: state and federal policy makers, industry members and variuous types of non-governmental organizations. Efforts to disseminate information to these audiences included: responding to information requests; presenting/participating in taaskforce meetings/legilative hearings; reviewing and developing marketing plans. Audiences: Federal policy makers Jan Papallardo, Federal Trade Commission State policy makers Maine Center for Disease Control Jill Ippoliti, Legislative Aid to the Maine Legislature's Committee on Agriculture, Conservation and Forestry "get real, get maine" program, Maine Department of Agriculture Legislative Task Force on Promoting Maine-Made Products Maine Legislature's Committee on Agriculture, Conservation and Forestry regarding Maine LD 0713 - An Act to Establish Labeling for Genetically-Engineered Foods Maine Department of Environmental Protection Business interests Idearc Media YoBon LLC. James Waslaw, Maine representative of Scientific Certification Services, Inc. Industry NGOs Kevin Athearn, Cobscook Bay Scallops Maine Aquaculture Association Maine Wood Products Association Non-industry NGOs Natural Resources Council of Maine <BR>PROJECT MODIFICATIONS: Two objectives not met in the project included using consumer and economic research methods to: 6) test the validity and reliability of stated preference approaches by comparing them to similar values from simulated markets, 7) compare various alternative modes of data collection (mail, phone, in-person) to test the validity and reliability of stated preference approaches. The above objectives were part of a large CDC-funded research project aimed at testing the reliability and validity of consumer responses to changes in food safety levels collected by mail survey techniques. During the course of the project, the above external validity checks were dropped as objectives.
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IMPACT: 2003/10 TO 2008/09<BR>
We used and tested stated-preference approaches to elicit consumers' willingness to pay for improvements in food safety. We found our statistical results worked extremely well (e.g., the WTP estimates meet the scope test with respect to the magnitudes of the subjective risks assessments), and learned that current estimates of the benefits of food safety improvements are grossly understated and give undue priority to foodborne illnesses that result in mortality. We studied the use of four non-monetary incentives ($1.00, $2.00, $2.00 phone card, $5.00 phone card) since little is known about how non-monetary incentives impact survey and item non-response, speed of response, data quality and cost effectiveness. We found significant differences in response rates, data quality and per-observation costs. Differences in data quality occur even when response rates are the same and we control for any socio-economic differences. This suggests that phone cards are treated differently by sub-groups in the population which seems to lead to respondent composition effects. We designed and tested a model explaining how the characteristics of the individual and the information simultaneously influence an information program's success. We learned the characteristics of the eco-label and psychological factors can change a persons likelihood-to-buy an eco-product. This highlights the importance of well-designed labeling and long-run provision of information through eco-marketing or eco-education programs. We examined whether an eco-labeling and marking effort was effective in changing: consumer knowledge, perceptions, attitudes, and information search behaviors, and producer (vehicle dealers and sales personnel) knowledge and behaviors. We learned well-designed eco-labeling and marketing strategies can, in fact, alter the underlying perceptual factors shown to be important in eco-buying behavior. We learned eco-marketing without a strong eco-labeling component can limit the programs effectiveness. When technologies for producing and processing foods are actively promoted and cross-promoted, then an individual's knowledge and their attitudes may depend on the source of one's information. We learned that knowledge and attitudes toward different food technologies are negatively related; knowledge of one technology is associated with negative views toward other technologies. This presents an interesting twist to the biotechnology labeling debate. Many supporters of the technology have fought to avoid any labeling requirement, while opponents have fought equally hard to impose labeling. However, the lack of biotechnology labeling may have hindered the ability of biotechnology proponents to positively influence attitudes toward foods produced with biotechnology, either directly or indirectly. We examined consumers reaction to foods treated with pathogen-reducing technologies, because consumer reactions may be critical to technology adoption by firms. We learned that introducing a new food-safety technology may lead to aggregate losses in sales. This may explain firms' reluctance to adopt these technologies.