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The Effects Of Information On Consumer Demand For Biotech Foods: Evidence From Experimental Auctions

Author

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  • Tegene, Abebayehu
  • Huffman, Wallace E.
  • Rousu, Matthew C.
  • Shogren, Jason F.

Abstract

Consumers' willingness to pay for food products decreases when the food label indicates that a food product is produced with the aid of modern biotechnology. This bulletin presents empirical evidence on consumers' willingness to pay for biotech foods based on the presence or absence of labels advising that the food was prepared with the aid of biotechnology. The authors designed and conducted an experimental auction to elicit consumers' willingness to pay for "genetically modified" (GM)-labeled and standard-labeled foods under different information regimes. The evidence gathered for vegetable oil, tortilla chips, and potatoes shows that labels matter. In particular, under all information treatments, consumers discounted food items labeled "GM" by an average of 14 percent. While gender, income, and other demographic characteristics appeared to have only a slight impact on consumers' willingness to pay for biotech foods, information from interested parties and third-party (independent) sources was found to have a strong impact.

Suggested Citation

  • Tegene, Abebayehu & Huffman, Wallace E. & Rousu, Matthew C. & Shogren, Jason F., 2003. "The Effects Of Information On Consumer Demand For Biotech Foods: Evidence From Experimental Auctions," Technical Bulletins 33577, United States Department of Agriculture, Economic Research Service.
  • Handle: RePEc:ags:uerstb:33577
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    References listed on IDEAS

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    1. Jason F. Shogren & John A. List & Dermot J. Hayes, 2000. "Preference Learning in Consecutive Experimental Auctions," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(4), pages 1016-1021.
    2. Shogren, Jason F. & Seung Y. Shin & Dermot J. Hayes & James B. Kliebenstein, 1994. "Resolving Differences in Willingness to Pay and Willingness to Accept," American Economic Review, American Economic Association, vol. 84(1), pages 255-270, March.
    3. Dermot J. Hayes & Jason F. Shogren & Seung Youll Shin & James B. Kliebenstein, 1995. "Valuing Food Safety in Experimental Auction Markets," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 77(1), pages 40-53.
    4. David Lucking-Reiley & John A. List, 2000. "Demand Reduction in Multiunit Auctions: Evidence from a Sportscard Field Experiment," American Economic Review, American Economic Association, pages 961-972.
    5. Viscusi, W Kip & Evans, William N, 1990. "Utility Functions That Depend on Health Status: Estimates and Economic Implications," American Economic Review, American Economic Association, vol. 80(3), pages 353-374, June.
    6. Mario F. Teisl & Nancy E. Bockstael & Alan Levy, 2001. "Measuring the Welfare Effects of Nutrition Information," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(1), pages 133-149.
    7. Jason F. Shogren & John A. Fox, 1996. "Consumer Preferences for Fresh Food Items with Multiple Quality Attributes: Evidence from an Experimental Auction of Pork Chops," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(4), pages 916-923.
    8. Huffman, Wallace E. & Shogren, Jason F. & Rousu, Matthew C. & Tegene, Abebayehu, 2001. "The Value To Consumers Of Gm Food Labels In A Market With Asymmetric Information: Evidence From Experimental Auctions," 2001 Annual meeting, August 5-8, Chicago, IL 20553, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    9. Robert O. Herrmann & Rex H. Warland & Arthur Sterngold, 1997. "Who reacts to food safety scares?: Examining the Alar crisis," Agribusiness, John Wiley & Sons, Ltd., vol. 13(5), pages 511-520.
    10. William Vickrey, 1961. "Counterspeculation, Auctions, And Competitive Sealed Tenders," Journal of Finance, American Finance Association, vol. 16(1), pages 8-37, March.
    11. repec:feb:framed:0052 is not listed on IDEAS
    12. Viscusi, W Kip, 1997. "Alarmist Decisions with Divergent Risk Information," Economic Journal, Royal Economic Society, vol. 107(445), pages 1657-1670, November.
    13. John List & David Lucking-Reiley, 2000. "Demand reduction in a multi-unit auction: Evidence from a sportscard field experiment," Framed Field Experiments 00180, The Field Experiments Website.
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    Cited by:

    1. Lee, Ji Yong & Han, Doo Bong & Nayga Jr, Rodolfo M. & Lim, Song-Soo, 2011. "Valuing traceability of imported beef in Korea: an experimental auction approach," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 55(3), September.
    2. Terawaki, Taku, 2005. "Effects of Information on Consumer Risk Perception and Willingness to Pay for Non-Genetically Modified Corn Oil," 2005 Annual meeting, July 24-27, Providence, RI 19555, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    3. Jin, Jing & Wailes, Eric & Dixon, Bruce & Nayga, Rodolfo M. Jr. & Zheng, Zhihao, 2014. "Consumer Acceptance and Willingness to Pay for Genetically Modified Rice in China," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 170503, Agricultural and Applied Economics Association.
    4. James, Jennifer S. & Fleischer, Shelby J. & Johnson, David H. & Schwab, Bradley D. & Lord, John, 2005. "Consumer Purchases of Biotech Sweet Corn: Results from a Market Experiment," 2005 Annual meeting, July 24-27, Providence, RI 19213, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    5. Xue, Hong & Mainville, Denise Y. & You, Wen & Nayga, Rodolfo M., Jr., 2009. "Nutrition Knowledge, Sensory Characteristics and Consumers’ Willingness to Pay for Pasture-Fed Beef," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49277, Agricultural and Applied Economics Association.

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