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Willingness to Pay (WTP) a Premium for Non-GM Foods versus Willingness to Accept (WTA) a Discount for GM Foods

Author

Listed:
  • Moon, Wanki
  • Balasubramanian, Siva K.
  • Rimal, Arbindra

Abstract

In a survey of UK consumers, we elicited their willingness to accept (WTA) a discount for GM foods and willingness to pay (WTP) a premium for non-GM foods in order to assess their valuation on the non-GM characteristic in food products. Mean WTA is found to exceed mean WTP, suggesting the valuation of the non-GM characteristic reflects an endowment effect, imperfect substitutability between GM and non-GM foods, or both. Regression results show that perceived risks (benefits) associated with GM foods significantly increase (decrease) WTA and WTP estimates. Additional regression models using the difference between WTA and WTP as the dependent variable indicate that risk (benefit) perceptions increased (decreased) the discrepancy between WTA and WTP estimates. The role of risk perceptions in explaining this discrepancy is congruent with consumers' propensity toward loss aversion as predicted by the endowment effect hypothesis and prospect theory.

Suggested Citation

  • Moon, Wanki & Balasubramanian, Siva K. & Rimal, Arbindra, 2007. "Willingness to Pay (WTP) a Premium for Non-GM Foods versus Willingness to Accept (WTA) a Discount for GM Foods," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 32(02), August.
  • Handle: RePEc:ags:jlaare:8638
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    File URL: http://purl.umn.edu/8638
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    References listed on IDEAS

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    5. Ribaudo, Marc & Kaplan, Jonathan D. & Christensen, Lee A. & Gollehon, Noel R. & Johansson, Robert C. & Breneman, Vincent E. & Aillery, Marcel P. & Agapoff, Jean & Peters, Mark, 2003. "Manure Management For Water Quality Costs To Animal Feeding Operations Of Applying Manure Nutrients To Land," Agricultural Economics Reports 33911, United States Department of Agriculture, Economic Research Service.
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    Cited by:

    1. Arita, Shawn & Mitchell, Lorraine & Beckman, Jayson, 2015. "Estimating the Effects of Selected Sanitary and Phytosanitary Measures and Technical Barriers to Trade on U.S.-EU Agricultural Trade," Economic Research Report 212887, United States Department of Agriculture, Economic Research Service.
    2. Beckman, Jayson & Arita, Shawn & Mitchell, Lorraine & Burfisher, Mary, 2015. "Agriculture in the Transatlantic Trade and Investment Partnership: Tariffs, Tariff-Rate Quotas, and Non-Tariff Measures," Economic Research Report 212886, United States Department of Agriculture, Economic Research Service.
    3. Arita, Shawn & Beckman, Jayson & Mitchell, Lorraine, 2017. "Reducing transatlantic barriers on U.S.-EU agri-food trade: What are the possible gains?," Food Policy, Elsevier, vol. 68(C), pages 233-247.

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