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Consumers' Willingness to Pay for New Genetically Modified Food Products: Evidence from Experimental Auctions of Intragenic and Transgenic Foods

Author

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  • Colson, Gregory
  • Rousu, Matthew C.
  • Huffman, Wallace E.
Abstract
New genetically modified (GM) foods were first marketed about a decade ago and have been surrounded by much controversy. Although the first GM traits were introduced into vegetables, GM grain and oilseed crops have been most successful because of their direct benefits to farmers. Recent advances in GM techniques enable new GM foods that contain enhanced consumer attributes. Private information from the biotech industry and from environmental groups paint extreme pictures of likely benefits, costs, and risks of new GM crops and foods. Given the complex nature of the GM food market, new experimental economic methods are used to assess consumers' willingness to pay for food products that might be made using new GM technologies. Participants in these auctions are randomly chosen adult consumer in major U.S. metropolitan areas; food labels are kept simple and focused on key attributes of experimental goods; and diverse private information from the agricultural biotech industry (e.g. Monsanto and Syngenta) and environmental groups (e.g. Greenpeace and Friends of the Earth) and independent third-party information are used to construct information treatments. Food labels and information treatments are randomized; and auctions are best described as private value, sealed bid, random n-th price. The econometric model of participants' bid prices, or willingness to pay, for three products---potato, tomato and broccoli---is a Bayesian random-effects seemingly-unrelated regression Tobit model. For a given food label, we find significant information treatment effects, controlling for demographic attributes of participants, prior opinions about GM foods, and healthiness of lifestyle. Moreover, these effects are shown to differ across food labels and for commodities with and without enhanced consumer attributes. Information is shown to have significant welfare effects.

Suggested Citation

  • Colson, Gregory & Rousu, Matthew C. & Huffman, Wallace E., 2008. "Consumers' Willingness to Pay for New Genetically Modified Food Products: Evidence from Experimental Auctions of Intragenic and Transgenic Foods," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6407, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea08:6407
    DOI: 10.22004/ag.econ.6407
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    2. Gregory Colson & Jay R. Corrigan & Carola Grebitus & Maria L. Loureiro & Matthew C. Rousu, 2016. "Which Deceptive Practices, If Any, Should Be Allowed in Experimental Economics Research? Results from Surveys of Applied Experimental Economists and Students," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 98(2), pages 610-621.
    3. Ran, Tao & Yue, Chengyan & Rihn, Alicia, 2015. "Are Grocery Shoppers of Households with Weight-Concerned Members Willing to Pay More for Nutritional Information on Food?," Journal of Food Distribution Research, Food Distribution Research Society, vol. 46(3), pages 1-18, November.
    4. Linda Ferrari, 2022. "Farmers' attitude toward CRISPR/Cas9: The case of blast resistant rice," Agribusiness, John Wiley & Sons, Ltd., vol. 38(1), pages 175-194, January.
    5. Dila Ikiz & R. Karina Gallardo & Amit Dhingra & Seanna Hewitt, 2018. "Assessing consumers’ preferences and willingness to pay for novel sliced packed fresh pears: A latent class approach," Agribusiness, John Wiley & Sons, Ltd., vol. 34(2), pages 321-337, March.
    6. Anne-Célia Disdier & Stéphan Marette, 2012. "Taxes, minimum-quality standards and/or product labeling to improve environmental quality and welfare: Experiments can provide answers," Journal of Regulatory Economics, Springer, vol. 41(3), pages 337-357, June.
    7. John C. Beghin & Christopher R. Gustafson, 2021. "Consumer Valuation of and Attitudes towards Novel Foods Produced with New Plant Engineering Techniques: A Review," Sustainability, MDPI, vol. 13(20), pages 1-17, October.
    8. Huffman, Wallace E., 2008. "Rising food and energy prices: projections for labor markets 2008-18 and beyond," ISU General Staff Papers 200810280700001170, Iowa State University, Department of Economics.
    9. Lusk, Jayson L. & McFadden, Brandon R. & Wilson, Norbert, 2018. "Do consumers care how a genetically engineered food was created or who created it?," Food Policy, Elsevier, vol. 78(C), pages 81-90.
    10. R. Karina Gallardo & Ines Hanrahan & Chengyan Yue & Vicki A. McCracken & James Luby & James R. McFerson & Carolyn Ross & Lilian Carrillo†Rodriguez, 2018. "Combining sensory evaluations and experimental auctions to assess consumers’ preferences for fresh fruit quality characteristics," Agribusiness, John Wiley & Sons, Ltd., vol. 34(2), pages 407-425, March.
    11. Huffman, Wallace, 2009. "Technology and Innovation in World Agriculture: Prospects for 2010-2019," Staff General Research Papers Archive 13060, Iowa State University, Department of Economics.
    12. Hans D. Steur & Jeroen Buysse & Shuyi Feng & Xavier Gellynck, 2013. "Role of Information on Consumers’ Willingness-to-pay for Genetically-modified Rice with Health Benefits: An Application to China," Asian Economic Journal, East Asian Economic Association, vol. 27(4), pages 391-408, December.
    13. Gustafson, Christopher R. & Meerza, Syed Imran Ali, 2023. "The Impact of Information on Valuation in Experimental Auctions: A Comparison of Between and Within Subject Designs," OSF Preprints 3g4m5, Center for Open Science.
    14. Yang Yang & Jill E. Hobbs, 2020. "The Power of Stories: Narratives and Information Framing Effects in Science Communication," American Journal of Agricultural Economics, John Wiley & Sons, vol. 102(4), pages 1271-1296, August.
    15. Yang, Y. & Hobbs, J., 2018. "Information Framing Effects in Biotechnology Communication A Comparison between Logical-scientific and Narrative Information," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277010, International Association of Agricultural Economists.
    16. Gautam, Ruskin & Gustafson, Christopher R. & Brooks, Kathleen R., 2017. "Label Position and it Impacts on WTP for Products Containing GMO," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258105, Agricultural and Applied Economics Association.
    17. McFadden, Jonathan R. & Huffman, Wallace E., 2017. "Consumer valuation of information about food safety achieved using biotechnology: Evidence from new potato products," Food Policy, Elsevier, vol. 69(C), pages 82-96.
    18. Zilberman, David & Kaplan, Scott & Kim, Eunice & Waterfield, Gina, 2013. "Lessons from the California GM Labeling Proposition on the State of Crop Biotechnology," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 149851, Agricultural and Applied Economics Association.
    19. Jane Kolodinsky & Sean Morris & Orest Pazuniak, 2019. "How consumers use mandatory genetic engineering (GE) labels: evidence from Vermont," Agriculture and Human Values, Springer;The Agriculture, Food, & Human Values Society (AFHVS), vol. 36(1), pages 117-125, March.
    20. Yulian Ding & Jianyu Yu & Yangyang Sun & Rodolfo M. Nayga & Yunyun Liu, 2023. "Gene‐edited or genetically modified food? The impacts of risk and ambiguity on Chinese consumers' willingness to pay," Agricultural Economics, International Association of Agricultural Economists, vol. 54(3), pages 414-428, May.
    21. Azucena GRACIA & Tiziana DE-MAGISTRIS, 2015. "The role of participants' competitiveness in consumers' valuation for food products using experimental auctions," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 61(10), pages 484-491.

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    More about this item

    Keywords

    Consumer/Household Economics; Demand and Price Analysis; Food Consumption/Nutrition/Food Safety;
    All these keywords.

    JEL classification:

    • Q10 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - General
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions

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