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Food Quality Verifications and Consumer Trust

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  • Hobbs, Jill E.
  • Innes, Brian G.
  • Uzea, Adrian D.
  • Zhang, Jing

Abstract

Food markets are increasingly characterized by an array of quality assurances with respect to credence attributes, reflecting a growing interest in where food comes from and how it is produced. The provision and signalling of these credence quality attributes includes both public and private sector initiatives. How effective are quality signals in addressing the information asymmetry inherent in credence attributes? To what extent do consumers trust quality assurances from different sources, and does this trust differs across food products or across credence attributes? The paper presents a simple economic welfare analysis of the market for a credence attribute under different assumptions with respect to the strength of consumer preferences, the existence of voluntary versus mandatory standards, and the credibility of third party certification. This is followed by an empirical analysis drawing from two consumer surveys in Canada using discrete choice experiments. Food quality claims related to farm animal welfare in a meat product and to environmental sustainability in a bread product are examined. Latent Class models reveal significant heterogeneity in consumer preferences, both in terms of the value consumers place on farm animal welfare and environmentally sustainable quality assurances, and the extent to which it matters who is verifying these assurances.

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Bibliographic Info

Paper provided by Agricultural Economics Society in its series 86th Annual Conference, April 16-18, 2012, Warwick University, Coventry, UK with number 135069.

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Date of creation: 2012
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Handle: RePEc:ags:aesc12:135069

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Keywords: credence attribute; animal welfare; environmental sustainability; quality verification; discrete choice experiment; Agricultural and Food Policy; Risk and Uncertainty; Q13; Q18;

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  1. Giannakas, Konstantinos & Fulton, Murray, 2002. "Consumption effects of genetic modification: what if consumers are right?," Agricultural Economics, Blackwell, vol. 27(2), pages 97-109, August.
  2. Anania, Giovanni & Nistico, Rosanna, 2003. "Public Regulation As A Substitute For Trust In Quality Food Markets. What If The Trust Substitute Cannot Be Fully Trusted?," 2003 Annual Meeting, August 16-22, 2003, Durban, South Africa 25924, International Association of Agricultural Economists.
  3. Babcock, Bruce A. & Miranowski, John A. & Carbone, Roxana, 2002. "An Initial Analysis of Adoption of Animal Welfare Guidelines on the U.S. Egg Industry," Staff Reports 32047, Food and Agricultural Policy Research Institute (FAPRI).
  4. Henson, Spencer & Reardon, Thomas, 2005. "Private agri-food standards: Implications for food policy and the agri-food system," Food Policy, Elsevier, vol. 30(3), pages 241-253, June.
  5. Rolfe, John, 1999. "Ethical Rules and the Demand for Free Range Eggs," Economic Analysis and Policy (EAP), Queensland University of Technology (QUT), School of Economics and Finance, vol. 29(2), pages 187-206, September.
  6. Peter Boxall & Wiktor Adamowicz, 2002. "Understanding Heterogeneous Preferences in Random Utility Models: A Latent Class Approach," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 23(4), pages 421-446, December.
  7. William A. Kerr & Jill E. Hobbs, 2002. "The North American-European Union Dispute Over Beef Produced Using Growth Hormones: A Major Test for the New International Trade Regime," The World Economy, Wiley Blackwell, vol. 25(2), pages 283-296, 02.
  8. Brian Roe & Ian Sheldon, 2007. "Credence Good Labeling: The Efficiency and Distributional Implications of Several Policy Approaches," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 89(4), pages 1020-1033.
  9. Richard Bennett, 1995. "The Value Of Farm Animal Welfare," Journal of Agricultural Economics, Wiley Blackwell, vol. 46(1), pages 46-60.
  10. Bruce A. Babcock & John Miranowski & Roxana Carbone, 2002. "Initial Analysis of Adoption of Animal Welfare Guidelines on the U.S. Egg Industry, An," Center for Agricultural and Rural Development (CARD) Publications 02-bp37, Center for Agricultural and Rural Development (CARD) at Iowa State University.
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