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Public Policy and Endogenous Beliefs: The Case of Genetically Modified Food

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  • Lusk, Jayson L.
  • Rozan, Anne

Abstract

When individuals have limited information and are uncertain about the quality of a good, government policy, or the lack thereof, can serve as a signal to consumers about the likelihood of realizing alternatives states of nature. In this paper, we focus on a controversial beliefs about government intervention: the market for genetically modified food. Data from a mail survey were used to estimate an econometric model where beliefs about labeling policy, beliefs about the safety of genetically modified food, and willingness to consume genetically modified food are endogenously determined. Results indicate that consumers who believe the government has a mandatory labeling policy for genetically modified food are more likely to believe genetically modified food is unsafe than consumers who believe no such policy is in place.

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File URL: http://purl.umn.edu/42460
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Bibliographic Info

Article provided by Western Agricultural Economics Association in its journal Journal of Agricultural and Resource Economics.

Volume (Year): 33 (2008)
Issue (Month): 2 (August)
Pages:

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Handle: RePEc:ags:jlaare:42460

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Web page: http://waeaonline.org/
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Related research

Keywords: Biotechnology; Food labeling policy; Genetically modified food; Trivariate probit; Demand and Price Analysis; Food Consumption/Nutrition/Food Safety;

References

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  1. Lence, Sergio H. & Hayes, Dermot J., 2005. "Genetically Modified Crops: Their Market and Welfare Impacts," Staff General Research Papers 12435, Iowa State University, Department of Economics.
  2. Maria L. Loureiro & Jill J. McCluskey & Ron C. Mittelhammer, 2003. "Are Stated Preferences Good Predictors of Market Behavior?," Land Economics, University of Wisconsin Press, vol. 79(1), pages 44-45.
  3. Lusk, Jayson L. & House, Lisa O. & Valli, Carlotta & Jaeger, Sara R. & Moore, Melissa & Morrow, Bert & Traill, W. Bruce, 2005. "Consumer welfare effects of introducing and labeling genetically modified food," Economics Letters, Elsevier, vol. 88(3), pages 382-388, September.
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  5. Huffman, Wallace & Rousu, Matthew & Shogren, Jason F. & Tegene, Abebayehu, 2004. "The Effects of Prior Beliefs and Learning on Consumers' Acceptance of Genetically Modified Foods," Staff General Research Papers 12212, Iowa State University, Department of Economics.
  6. W. Bruce Traill, 2004. "Effect of information about benefits of biotechnology on consumer acceptance of genetically modified food: evidence from experimental auctions in the United States, England, and France," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 31(2), pages 179-204, June.
  7. Jayson L. Lusk & W. Bruce Traill & Lisa O. House & Carlotta Valli & Sara R. Jaeger & Melissa Moore & Bert Morrow, 2006. "Comparative Advantage in Demand: Experimental Evidence of Preferences for Genetically Modified Food in the United States and European Union," Journal of Agricultural Economics, Wiley Blackwell, vol. 57(1), pages 1-21, 03.
  8. Murray Fulton & Konstantinos Giannakas, 2004. "Inserting GM Products into the Food Chain: The Market and Welfare Effects of Different Labeling and Regulatory Regimes," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, Agricultural and Applied Economics Association, vol. 86(1), pages 42-60.
  9. Lapan, Harvey E. & Moschini, GianCarlo, 2004. "Innovation and Trade with Endogenous Market Failure: The Case of Genetically Modified Products," Staff General Research Papers 2109, Iowa State University, Department of Economics.
  10. Matthew C. Rousu & Wallace E. Huffman & Jason F. Shogren & Abebayehu Tegene, 2004. "Estimating the Public Value of Conflicting Information: The Case of Genetically Modified Foods," Land Economics, University of Wisconsin Press, vol. 80(1), pages 125-135.
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  12. Marschak, T A, 1978. "On the Study of Taste Changing Policies," American Economic Review, American Economic Association, vol. 68(2), pages 386-91, May.
  13. Hayes, Dermot J. & Shogren, Jason F. & Shin, Seung Youll & Kliebenstein, James, 1995. "Valuing Food Safety in Experimental Auction Markets," Staff General Research Papers 835, Iowa State University, Department of Economics.
  14. Giannakas, Konstantinos & Fulton, Murray, 2002. "Consumption effects of genetic modification: what if consumers are right?," Agricultural Economics, Blackwell, Blackwell, vol. 27(2), pages 97-109, August.
  15. Viscusi, W Kip, 1989. " Prospective Reference Theory: Toward an Explanation of the Paradoxes," Journal of Risk and Uncertainty, Springer, Springer, vol. 2(3), pages 235-63, September.
  16. S.S. Vickner, 2004. "Media Coverage of Biotech Foods and Influence on Consumer Choice," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, Agricultural and Applied Economics Association, vol. 86(5), pages 1238-1246.
  17. Huck, Steffen, 1998. "Trust, Treason, and Trials: An Example of How the Evolution of Preferences Can Be Driven by Legal Institutions," Journal of Law, Economics and Organization, Oxford University Press, Oxford University Press, vol. 14(1), pages 44-60, April.
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Citations

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Cited by:
  1. Jin, Hyun Joung & Han, Dae Hee, 2014. "Interaction between message framing and consumers’ prior subjective knowledge regarding food safety issues," Food Policy, Elsevier, Elsevier, vol. 44(C), pages 95-102.
  2. Bharat Ramaswami & Sangeeta Bansal & Sujoy Chakravarty, 2013. "The Informational and signaling impacts of labels: Experimental evidence from India on GM foods," Indian Statistical Institute, Planning Unit, New Delhi Discussion Papers 13-01, Indian Statistical Institute, New Delhi, India.
  3. Henseleit, Meike & Kubitzki, Sabine, 2009. "‘GMO-Free’ Labels – Enhancing Transparency or Deceiving Consumers?," 2009 Conference, August 16-22, 2009, Beijing, China, International Association of Agricultural Economists 51029, International Association of Agricultural Economists.

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