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Are Stated Preferences Good Predictors of Market Behavior?

Author

Listed:
  • Maria L. Loureiro
  • Jill J. McCluskey
  • Ron C. Mittelhammer

Abstract

Using an economic experiment in conjunction with a survey, we analyze whether consumers’ hypothetical willingness-to-pay responses are effective predictors of actual market behavior. We model revealed preferences as a function of socio-demographic characteristics and instrumental variables that represent the intensity of stated preferences. Our findings show that consumers who state that they are willing to pay a premium, which is equal to or greater than a positive lower bound, have a higher likelihood of actually buying the product in question. This implies that consumers’ actions in the economic experiment validate their survey responses.

Suggested Citation

  • 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.
  • Handle: RePEc:uwp:landec:v:79:y:2003:i:1:p:44-45
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    References listed on IDEAS

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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.
    2. V. Kerry Smith, 1993. "Nonmarket Valuation of Environmental Resources: An Interpretive Appraisal," Land Economics, University of Wisconsin Press, vol. 69(1), pages 1-26.
    3. Karen Blumenschein & Magnus Johannesson & Glenn C. Blomquist & Bengt Liljas & Richard M. O’Conor, 1998. "Experimental Results on Expressed Certainty and Hypothetical Bias in Contingent Valuation," Southern Economic Journal, Southern Economic Association, vol. 65(1), pages 169-177, July.
    4. Alan Randall, 1994. "Difficulty with the Travel Cost Method," Land Economics, University of Wisconsin Press, vol. 70(1), pages 88-96.
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    Citations

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    Cited by:

    1. Adalja, Aaron & Hanson, James & Towe, Charles & Tselepidakis, Elina, 2015. "An Examination of Consumer Willingness to Pay for Local Products," Agricultural and Resource Economics Review, Cambridge University Press, vol. 44(03), pages 253-274, December.
    2. repec:spr:agrhuv:v:34:y:2017:i:4:d:10.1007_s10460-017-9785-9 is not listed on IDEAS
    3. Kirsten, Johann F. & Vermeulen, Hester & Van Zyl, Karlien & Du Randt, Gerrie & Du Plessis, H. & Weissnar, Tessa, 2012. "The economic potential for an origin based marketing and certification system for a meat product in South Africa: Perceptions, preferences, and experiments," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 125764, International Association of Agricultural Economists.
    4. Wolf, Christopher A. & Tonsor, Glynn T. & Olynk, Nicole J., 2011. "Understanding U.S. Consumer Demand for Milk Production Attributes," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 36(2), August.
    5. repec:ags:afjare:225657 is not listed on IDEAS
    6. Thuriane Mahé, 2010. "Are Stated Preferences Confirmed by Purchasing Behaviours? The Case of Fair Trade-Certified Bananas in Switzerland," Journal of Business Ethics, Springer, vol. 92(2), pages 301-315, April.
    7. Christopher A. Wolf & Frank Lupi & Stephen Harsh, 2011. "Farmer demand for financial record-keeping system attributes," Agricultural Finance Review, Emerald Group Publishing, vol. 71(2), pages 259-276, August.
    8. Robert Bartels & Denzil Fiebig & Arthur Soest, 2006. "Consumers and experts: an econometric analysis of the demand for water heaters," Empirical Economics, Springer, vol. 31(2), pages 369-391, June.
    9. Lusk, Jayson L. & Rozan, Anne, 2008. "Public Policy and Endogenous Beliefs: The Case of Genetically Modified Food," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 33(2), August.
    10. Lagerkvist, Carl Johan & Hess, Sebastian & Ngigi, Marther W. & Okello, Julius Juma, 2011. "Consumers’ Willingness to Pay for Food Safety in Nairobi: The Case of Fresh Vegetables," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114409, European Association of Agricultural Economists.
    11. McCluskey, Jill J. & Grimsrud, Kristine M. & Ouchi, Hiromi & Wahl, Thomas I., 2005. "Bovine spongiform encephalopathy in Japan: consumers’ food safety perceptions and willingness to pay for tested beef," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 49(2), June.
    12. Czap, Natalia V. & Czap, Hans J., 2010. "An experimental investigation of revealed environmental concern," Ecological Economics, Elsevier, vol. 69(10), pages 2033-2041, August.
    13. Ifft, Jennifer & Roland-Holst, David W. & Zilberman, David, 2009. "Valuation of Safety-Branded and Traceable Free Range Chicken in Ha Noi: Results from a Field Experiment," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49444, Agricultural and Applied Economics Association.
    14. Sobolewski, Maciej & Czajkowski, MikoŁaj, 2012. "Network effects and preference heterogeneity in the case of mobile telecommunications markets," Telecommunications Policy, Elsevier, vol. 36(3), pages 197-211.
    15. Jayson L. Lusk & F. Bailey Norwood & J. Ross Pruitt, 2006. "Consumer Demand for a Ban on Antibiotic Drug Use in Pork Production," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(4), pages 1015-1033.
    16. Fogliatto, Flavio S. & da Silveira, Giovani J.C., 2008. "Mass customization: A method for market segmentation and choice menu design," International Journal of Production Economics, Elsevier, vol. 111(2), pages 606-622, February.
    17. repec:eee:touman:v:62:y:2017:i:c:p:29-41 is not listed on IDEAS
    18. Helena Resano-Ezcaray & Ana Isabel Sanjuán-López & Luis Miguel Albisu-Aguado, 2010. "Combining Stated and Revealed Preferences on Typical Food Products: The Case of Dry-Cured Ham in Spain," Journal of Agricultural Economics, Wiley Blackwell, vol. 61(3), pages 480-498.
    19. Li, Minghao & Wang, Qingbin & Kolodinsky, Jane M., 2012. "Estimating the Optimal Premium Rates for Credential Food Attributes: A Case Study in the Northeast United States," Journal of Food Distribution Research, Food Distribution Research Society, vol. 43(2), July.
    20. Bigerna, S. & Bollino, C.A. & Micheli, S. & Polinori, P., 2017. "Revealed and stated preferences for CO2 emissions reduction: The missing link," Renewable and Sustainable Energy Reviews, Elsevier, vol. 68(P2), pages 1213-1221.
    21. Sauer, Uta & Fischer, Anke, 2010. "Willingness to pay, attitudes and fundamental values -- On the cognitive context of public preferences for diversity in agricultural landscapes," Ecological Economics, Elsevier, vol. 70(1), pages 1-9, November.
    22. McCluskey, Jill J. & Loureiro, Maria L., 2003. "Consumer Preferences And Willingness To Pay For Food Labeling: A Discussion Of Empirical Studies," Journal of Food Distribution Research, Food Distribution Research Society, vol. 34(03), November.

    More about this item

    JEL classification:

    • Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness
    • Q26 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Recreational Aspects of Natural Resources

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