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A Split-Sample Revealed and Stated Preference Demand Model to Examine Homogenous Subgroup Consumer Behavior Responses to Information and Food Safety Technology Treatments

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  • O. Ashton Morgan
  • John C. Whitehead
  • William L. Huth
  • Gregory S. Martin
  • Richard Sjolander

Abstract

The combination and joint estimation of revealed and stated preference (RP/SP) data approach to examining consumer preferences to relevant policy-based measures typically fail to account for heterogeneity in the data by considering behavior of the average individual. However, in policy-based analyses, where the research is often driven by understanding how different individuals react to different or similar scenarios, a preferred approach would be to analyze preferences of homogenous population subgroups. We accomplish this by developing a split-sample RP/SP analysis that examines whether homogenous subgroups of the population, based on individual health and behavioral characteristics, respond differently to health-risk information and new food safety technology. The ongoing efforts by the U.S. Food and Drug Administration (FDA) to reduce illness and death associated with consuming raw Gulf of Mexico oysters provide an ideal platform for the analysis as the health risks only relate to a very specific consumer subgroup. Results from split-sample demand models indicate that educational information treatments cause vulnerable at-risk consumers to reduce their oyster demand, implying that a more structured approach to disseminating the brochures to the at-risk population could have the desired result of reducing annual illness levels. Also, findings across all subgroups provide strong empirical evidence that the new FDA policy requiring processing technology to be used in oyster production will have a detrimental effect on the oyster industry. Key Words: Food safety technology; health-risk information; homogenous subgroups; revealed preference; stated preference

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File URL: http://econ.appstate.edu/RePEc/pdf/wp1306.pdf
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Bibliographic Info

Paper provided by Department of Economics, Appalachian State University in its series Working Papers with number 13-06.

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Date of creation: 2013
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Handle: RePEc:apl:wpaper:13-06

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Postal: Thelma C. Raley Hall, Boone, North Carolina 28608
Phone: 828-262-2148
Fax: 828-262-6105
Web page: http://www.business.appstate.edu/departments/economics/
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  1. Adamowicz W. & Louviere J. & Williams M., 1994. "Combining Revealed and Stated Preference Methods for Valuing Environmental Amenities," Journal of Environmental Economics and Management, Elsevier, vol. 26(3), pages 271-292, May.
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  1. New Appstate working paper
    by John Whitehead in Environmental Economics on 2013-05-01 11:29:20

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