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The Value of Verifiable Information in a Controversial Market: Evidence from Lab Auctions of Genetically Modified Food

Author

Listed:
  • Rousu, Matthew
  • Huffman, Wallace
  • Shogren, Jason F.
  • Tegene, Abebayehu

Abstract

Two interested parties dominate the current debate on genetically modified (GM) foods: environmental groups and agribusiness companies. For the average consumer to arrive at an informed decision on these new foods, they must rely on information from interested parties. Unfortunately, information from interested parties does not provide an accurate picture of the benefits and risks of new products. This paper examines the effects of information on consumers? demand for new food products, GM-foods, in an environment where information from one or more interested parties is provided. We design and conduct laboratory auction experiments using randomly chosen adult consumers from two large metropolitan areas who are grouped into twelve experimental units and subjected to six randomly assigned information treatments. We find that in this environment, verifiable information has a small but positive value to sample consumers, and the projected annual social value to all processed foods consumed is relatively large for this public good. Such a large potential value may make it worthwhile for the United States to establish a new third party institution that would produce and distribute verifiable information on GM food.

Suggested Citation

  • Rousu, Matthew & Huffman, Wallace & Shogren, Jason F. & Tegene, Abebayehu, 2002. "The Value of Verifiable Information in a Controversial Market: Evidence from Lab Auctions of Genetically Modified Food," Staff General Research Papers Archive 10009, Iowa State University, Department of Economics.
  • Handle: RePEc:isu:genres:10009
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    File URL: http://www2.econ.iastate.edu/papers/p3807-2002-02-25.pdf
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    References listed on IDEAS

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    1. 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.
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    Cited by:

    1. Liu, Pengcheng, 2009. "Consumers’ WTA for GM rice cookie: an experiment study in China," 2009 Conference, August 16-22, 2009, Beijing, China 51771, International Association of Agricultural Economists.
    2. Jay R. Corrigan & Matthew C. Rousu, 2006. "Posted Prices and Bid Affiliation: Evidence from Experimental Auctions," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(4), pages 1078-1090.
    3. Hu, Wuyang & Woods, Timothy & Bastin, Sandra & Cox, Linda & You, Wen, 2011. "Assessing Consumer Willingness to Pay for Value-Added Blueberry Products Using a Payment Card Survey," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 43(02), pages 243-258, May.
    4. Huffman, Wallace E. & Rousu, Matthew & Shogren, Jason F. & Tegene, Abebayehu, 2007. "The effects of prior beliefs and learning on consumers' acceptance of genetically modified foods," Journal of Economic Behavior & Organization, Elsevier, vol. 63(1), pages 193-206, May.
    5. Huffman, Wallace & Rousu, Matthew & Shogren, Jason F. & Tegene, Abebayehu, 2002. "Should the United States Regulate Mandatory Labeling for Genetically Modified Foods?," Staff General Research Papers Archive 10047, Iowa State University, Department of Economics.
    6. Huffman Wallace E. & Rousu Matthew & Shogren Jason F & Tegene Abebayehu, 2004. "Consumer's Resistance to Genetically Modified Foods: The Role of Information in an Uncertain Environment," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 2(2), pages 1-15, May.
    7. Jay Corrigan & Matthew Rousu, 2008. "Estimating the value consumers derive from product labeling," Framed Field Experiments 00192, The Field Experiments Website.
    8. D Rigby & M Burton, 2003. "Capturing Preference Heterogeneity in Stated Choice Models: A Random Parameter Logit Model of the Demand for GM Food," The School of Economics Discussion Paper Series 0319, Economics, The University of Manchester.
    9. Harrison, R. Wes & Han, Jae-Hwan, 2005. "The Effects of Urban Consumer Perceptions on Attitudes for Labeling of Genetically Modified Foods," Journal of Food Distribution Research, Food Distribution Research Society, vol. 36(02), July.
    10. Maurizio Canavari & Rodolfo Nayga, 2009. "On consumers' willingness to purchase nutritionally enhanced genetically modified food," Applied Economics, Taylor & Francis Journals, vol. 41(1), pages 125-137.
    11. Dannenberg, Astrid, 2008. "Is it Who You Ask or How You Ask? Findings of a Meta-Analysis on Genetically Modified Food Valuation Studies," ZEW Discussion Papers 08-096, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    12. Huffman, Wallace E. & Rousu, Matthew C. & Shogren, Jason F. & Tegene, Abebayehu, 2003. "Consumers' Resistance To Genetically Modified Foods In High Income Countries: The Role Of Information In An Uncertain Environment," 2003 Annual Meeting, August 16-22, 2003, Durban, South Africa 25837, International Association of Agricultural Economists.
    13. Huffman, Wallace & Rousu, M. & Shogren, Jason F. & Tegene, Abebayehu, 1009. "Are U.S. Consumers Tolerant of GM Foods?," Staff General Research Papers Archive 12336, Iowa State University, Department of Economics.
    14. 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.
    15. Colson, Gregory & Huffman, Wallace E. & Rousu, Matthew C., 2011. "Improving the Nutrient Content of Food through Genetic Modification: Evidence from Experimental Auctions on Consumer Acceptance," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 36(2), August.
    16. Wachenheim, Cheryl J. & Vanwechel, Tamara, 2004. "The Influence Of Environmental-Impact Information On Consumer Willingness To Pay For Products Labeled As Free Of Genetically Modified Ingredients," Journal of Food Distribution Research, Food Distribution Research Society, vol. 35(02), July.
    17. Dannenberg, Astrid, 2009. "The dispersion and development of consumer preferences for genetically modified food -- A meta-analysis," Ecological Economics, Elsevier, vol. 68(8-9), pages 2182-2192, June.
    18. Stefani, Gianluca & Valli, Carlotta, 2004. "Exploring the Impacts of Risk Communication Policies on Welfare: Theoretical Aspects," 84th Seminar, February 8-11, 2004, Zeist, The Netherlands 24989, European Association of Agricultural Economists.
    19. Huffman, Wallace & Rousu, Matthew & Shogren, Jason F. & Tegene, Abebayehu, 2003. "Better Dead Than GM-Fed? Information and the Effects of Consumers' Resistance to GM-Foods in High-Income Countries," Staff General Research Papers Archive 10345, Iowa State University, Department of Economics.
    20. Ganiere, Pierre & Chern, Wen S. & Hahn, David E. & Chiang, Fu-Sung, 2004. "Consumer Attitudes towards Genetically Modified Foods in Emerging Markets: The Impact of Labeling in Taiwan," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association (IFAMA), vol. 7(03).

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    JEL classification:

    • Q10 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - General

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