No full-text available
To read the full-text of this research,
you can request a copy directly from the author.
The Effect of Proposition 2 on the Demand for Eggs in California
Abstract
Californians recently passed Proposition 2, barring the use of cages in egg production in the state. Because most consumers are unknowledgeable of egg production practices, the appearance of Proposition 2 likely served as an information shock that potentially affected consumer demand. In this paper, we use scanner data to investigate the market effects of Proposition 2 by studying whether and how consumer demand for eggs changed in the months leading up to the vote in San Francisco and Oakland. Results indicate that demand for the types of eggs associated with higher animal welfare standards, cage free and organic, increased over time and in response to articles on the proposition whereas demand for other types of eggs fell. These results coupled with the finding that cage free and organic egg demand was virtually unchanged in a location unaffected by the vote, Dallas, suggests that Proposition 2 had a significant effect on consumer preferences for eggs – increasing demand for cage free and organic eggs by 180% and 20%, respectively.
... Recent years have seen consumers develop affinity for vegetarian, organic, omega-3, cage-free, free-range, fertile, nutrient-enhanced, and other specialty eggs, which is believed to be brought by rising health consciousness and healthy lifestyles, increased awareness, and concern about animal welfare (Bakhtavoryan and Lopez, 2020;Grand View Research, 2019;Lusk, 2010). For example, the number of individuals in the United States consuming organic eggs increased by 14% over the span of 2014, reaching 80.35 million (Statista Research Department, 2020. ...
... We analyze demand inter-relationships among various egg types in the United States using a system's framework in line with Huang and Lin (2000), Asselin (2005), Chase et al. (2009), Lusk (2010, Chang, Lusk, and Norwood (2010), Shiratori (2011), Heng (2015), and Bakhtavoryan and Lopez (2020). Meanwhile, our study makes four distinct contributions to the previous literature. ...
... 2 While a number of previous studies examined demand inter-connectedness among egg products, to the best of our knowledge, no single study provides an exhaustive coverage of egg products (see for example, Lusk [2010]). 3 The FIML is also asymptotically more efficient vis-à-vis 3SLS and GMM procedures in empirical settings where the underlying modeling assumptions hold. 4 For example, Lusk (2010) omits omega-3 eggs from the empirical analysis of egg demand system, while confining the analysis to two specific geographical markets in the United States. ...
... Recent years have seen consumers develop affinity for vegetarian, organic, omega-3, cage-free, free-range, fertile, nutrient-enhanced, and other specialty eggs, which is believed to be brought by rising health consciousness and healthy lifestyles, increased awareness, and concern about animal welfare (Bakhtavoryan and Lopez, 2020;Grand View Research, 2019;Lusk, 2010). For example, the number of individuals in the United States consuming organic eggs increased by 14% over the span of 2014, reaching 80.35 million (Statista Research Department, 2020. ...
... We analyze demand inter-relationships among various egg types in the United States using a system's framework in line with Huang and Lin (2000), Asselin (2005), Chase et al. (2009), Lusk (2010, Chang, Lusk, and Norwood (2010), Shiratori (2011), Heng (2015), and Bakhtavoryan and Lopez (2020). Meanwhile, our study makes four distinct contributions to the previous literature. ...
... 2 While a number of previous studies examined demand inter-connectedness among egg products, to the best of our knowledge, no single study provides an exhaustive coverage of egg products (see for example, Lusk [2010]). 3 The FIML is also asymptotically more efficient vis-à-vis 3SLS and GMM procedures in empirical settings where the underlying modeling assumptions hold. 4 For example, Lusk (2010) omits omega-3 eggs from the empirical analysis of egg demand system, while confining the analysis to two specific geographical markets in the United States. ...
We adopt an EASI model to estimate demand for omega-3, organic, cage-free, and conventional eggs in the United States. Our empirical framework accounts for demand inter-dependencies among these egg types, while allowing for unrestricted Engel curves, unobserved consumer heterogeneity, and a broader product and geographic coverage. We further address endogeneity of prices and expenditures and left-censoring induced by disaggregate data. Our results indicate that the demand for organic and cage-free eggs is price-elastic, while the demand for omega-3 and conventional eggs is price-inelastic. Additionally, we establish strong substitutability relationships between the eggs. Finally, we measure consumer welfare consequences of rising domestic egg prices brought by Japan’s egg import tariff reductions.
... 3 The specific objective of this paper is to examine how consumers reacted to the Measure D media campaign and to the election outcome. There is evidence suggesting that highlighted news coverage can lead to sharp information updates (Huberman and Regev 2001;Lusk 2010), and local elections can publicly reveal to individuals previously unknown information about the preferences of their neighbors and peers (Goldstein, Cialdini, and Griskevicius 2008). Investigating whether campaigns and elections also lead to behavioral changes-whether through information or social norm channels-has important policy implications about how and where SSB policies will be effective in altering SSB consumption. ...
... their beliefs and behaviors based on information provided by the media and by advisory campaigns. Several studies show that new information about food-related health problems, food safety, and animal safety can alter preferences and consumer demand (Brown and Schrader 1990;Chavas 1983;Lusk 2010;Schlenker and Villas-Boas 2009;Van Ravenswaay and Hoehn 1991;Yen and Jensen 1996). The approach of our analysis is particularly close to Lusk (2010), who uses scanner data to examine how consumer demand for eggs changed in the months leading up a statewide election on whether to bar the use of cages in California egg production. ...
... Several studies show that new information about food-related health problems, food safety, and animal safety can alter preferences and consumer demand (Brown and Schrader 1990;Chavas 1983;Lusk 2010;Schlenker and Villas-Boas 2009;Van Ravenswaay and Hoehn 1991;Yen and Jensen 1996). The approach of our analysis is particularly close to Lusk (2010), who uses scanner data to examine how consumer demand for eggs changed in the months leading up a statewide election on whether to bar the use of cages in California egg production. The author finds that demand for the types of eggs associated with higher animal welfare standards increased over time in response to articles on the election, whereas demand for other types of eggs fell. ...
We examine how soda sales changed due to the campaign attention and election outcome of a local excise tax on sugar‐sweetened beverages. Using panel data of beverage sales from university retailers in Berkeley, California, we estimate that soda purchases relative to control beverages significantly dropped immediately after the election, months before the tax was implemented in the city of Berkeley or on campus. Supplemental scanner data from off‐campus retailers reveal this result is not unique to the university setting. Our findings suggest soda tax media coverage and election outcomes can have larger effects on purchasing behavior than the tax itself. (JEL D12, H20, C23, I38, Q18)
... This type of conflict may arise from people having little prior knowledge about egg production methods and effective information campaigns from animal rights advocacy groups. For example, information from advocacy groups surrounding Proposition 2 led to an increase in political, reported demand for organic eggs (Lusk 2010). Moreover, consumers believe a much higher share of eggs are produced using cage-free systems than actually are (Norwood and Lusk 2011). ...
... In the 2008 vote, Proposition 2 passed with 63% of voters voting in favor of increasing animal confinement space (Lusk 2010). The results here suggest that the pro-Proposition video was more effective in changing consumers' neural activity, which supports Lusk's (2010) work that determined Proposition 2 advertising increased consumer demand for organic eggs. ...
... In the 2008 vote, Proposition 2 passed with 63% of voters voting in favor of increasing animal confinement space (Lusk 2010). The results here suggest that the pro-Proposition video was more effective in changing consumers' neural activity, which supports Lusk's (2010) work that determined Proposition 2 advertising increased consumer demand for organic eggs. Our functional MRI investigations into these decisions show that individuals who received information advocating for ethical egg production methods had increased insula activations when making decisions between higher-priced, open method eggs and lower priced, conventional method eggs. ...
In 2008, California passed Proposition 2, specifying confinement space for certain farm animals. Proposition 2 went into full effect January 2015 and has significant implications for egg production in California and possibly even interstate commerce. We examined the influence of promotional videos aired during the campaign on consumers’ willingness-to-pay for eggs produced in a more open production system (i.e., cage-free, free range) and corresponding neurofunctional activations during decisions. Forty-six participants (24 females), aged 18–55 years (
... According to McEachern and Warnby (2008), consumer knowledge of and confidence in animal welfare labels, and the standards they are based on, influence purchase decisions. Moreover, Lusk (2010) found consumer demand for cage-free and organic eggs increased by 180% and 20%, respectively, in the months leading up to the landmark vote regarding Proposition 2 (a ban on cages in egg production in the US state of California), while demand for other types of eggs fell. This suggests that the increased information available and media attention surrounding Proposition 2 highlighted the issue and had a significant effect on consumer preferences for higher welfare eggs (Lusk, 2010). ...
... Moreover, Lusk (2010) found consumer demand for cage-free and organic eggs increased by 180% and 20%, respectively, in the months leading up to the landmark vote regarding Proposition 2 (a ban on cages in egg production in the US state of California), while demand for other types of eggs fell. This suggests that the increased information available and media attention surrounding Proposition 2 highlighted the issue and had a significant effect on consumer preferences for higher welfare eggs (Lusk, 2010). ...
Public concern for farm animal welfare is growing. However, high welfare purchases require consumers to make sense of often confusing labels. This study aims to investigate consumers' preferences for higher welfare products with on-package animal welfare labels and to explore whether providing consumers with detailed information about the welfare conditions behind on-package animal welfare labels could have a positive influence on farm animal welfare. The survey was conducted online and involved participants (N = 1612) being randomly assigned into one of two-treatment groups: (1) an animal welfare label and (2) an animal welfare label with details about the welfare standards signified by that label. Participants were asked their intentions to purchase products with varying animal welfare labels. Participants were also surveyed with an adapted version of the Animal Attitude Scale that measured pro-welfare attitudes, resulting in an Animal Empathy Score (AES), a series of demographics questions, and to rate the welfare of pigs, chickens and laying hens in Australian food production. The results revealed that the provision of additional information significantly increased intention to purchase higher than conventional welfare products. The empathy measures revealed that younger participants, females and those with lower household incomes all had significantly higher AES. Moreover, AES was associated with intent to purchase higher welfare products. No interaction terms were significant, suggesting that the positive influence of information on purchase intentions is not dependent on participants' pro-welfare attitudes. Given animal welfare is market-driven in countries such as Australia, the findings suggest that providing farm animal welfare information at the point-of-purchase could boost appreciation and demand for higher than conventional welfare products.
... Finally, it might be that the marketplace provides avenues for consumers to demand animal welfare-promoting products. As noted in Lusk (2010), increasing information involving animal production correlates with heightened consumer concern for animal welfare in their purchasing decisions. It might be that Veblen's theory of conspicuous consumption also motivates this effect (Bagwell and Bernheim, 1996); in some locations, it might be fashionable to buy animal welfarepromoting products in much the same way that Sexton and Sexton (2014) suggest conspicuous conservation increased demand for some hybrid automobiles. ...
... There is limited evidence on the extent to which the passage of such a policy might influence aggregate egg demand.Lusk (2010) showed that the debate leading up to Proposition 2 in California caused an increase in demand for cage-free and organic eggs. However, it is unclear how these estimates might correspond to a situation in which the policy ultimately goes into effect without the knowledge of many consumers and the cage free (or larger cage) eggs are now t ...
California legislation outlawed the use and sale of battery cages for egg-laying hens in 2015. While a number of ex ante studies projected the effects of the housing prohibitions, the ultimate ex post effects are unknown. Using a price series reported by the USDA, we study the movement of daily egg prices in California and the United States before and after the law's implementation. Depending on the methods used, we find that Californians now pay between 1.08 more for a dozen eggs. The estimates suggest an annual reduction in California consumer surplus of between 850 million.
... scanner data). Nonetheless, only few peer-reviewed studies ( Baltzer, 2004;Lusk, 2010;Chang et al., 2010;Tonsor and Olynk, 2011) used market data to explore issues related with consumers demand for animal-friendly food products. While the findings from these studies significantly contributed to the literature on animal welfare, our study varies with the papers of Baltzer (2004), Lusk (2010), Chang et al. (2010 and Norwood and Lusk (2011) in three key ways. ...
... Nonetheless, only few peer-reviewed studies ( Baltzer, 2004;Lusk, 2010;Chang et al., 2010;Tonsor and Olynk, 2011) used market data to explore issues related with consumers demand for animal-friendly food products. While the findings from these studies significantly contributed to the literature on animal welfare, our study varies with the papers of Baltzer (2004), Lusk (2010), Chang et al. (2010 and Norwood and Lusk (2011) in three key ways. First, we used market data on food and drink purchases for consumption at home to assess whether animal welfare is competing with other ethical food attributes such as organic. ...
Purpose
– The purpose of this paper is to assess Scottish consumers’ demand for animal welfare and organic pork. The paper also tried to answer the following questions: first, are animal-friendly pork and organic-pork complements or substitutes (competing)? Second, what is the relationship between pork products with different animal welfare labels (i.e. “freedom food” pork vs “specially selected pork”)? Third, does the demand for animal-friendly and organic pork vary with the level of deprivation of the area where consumers are living?
Design/methodology/approach
– The dataset used in the analysis is the Kantar Worldpanel dataset for Scotland, which contains weekly data of food and drink purchases for consumption at home, covering the period 2006-2011. The panel is representative of the Scottish population and covers about 3,694 households. The linear version of the almost ideal demand system was estimated. Then, the own- and the cross-price elasticities as well as the expenditure elasticities for the 22 food categories and products were computed.
Findings
– The results indicate that when the price of animal-friendly pork increases, consumers decrease their consumption of this product and substitute it by organic pork or regular pork, especially in the case of fresh pork, bacon and sausages. It was found that products with different animal welfare accreditation are substitutes in the eyes of Scottish consumers and are, therefore, competing for the market share of animal-friendly foods. The results also show that the demand for animal-friendly pork is more elastic in the most deprived areas in Scotland.
Originality/value
– To the best of the authors’ knowledge, this is the first study that estimates the demand for conventional, animal-friendly and organic pork using a scanner data in Scotland and controlling for the variation by area of deprivation.
... The dissonance may arise from people having little knowledge about egg production methods and effective information campaigns from animal rights advocacy groups. For example, consumers believe a much higher share of eggs are produced using cage-free systems than actually are [17] and campaign advertising surrounding Proposition 2 led to an increase in demand for organic eggs [18]. ...
... Advertisements from California's Proposition 2 in 2008, as well as a control video, were used because the choice options were eggs that varied by production method, as well as price. The results here suggest that the pro-Proposition 2 video was effective in persuading consumers-confirming Lusk's [18] work that determined Proposition 2 advertising increased consumer demand for organic eggs. The anti-Proposition 2 video and, as expected, the control video was not effective in changing consumer behavior. ...
Consumers prefer to pay low prices and increase animal welfare; however consumers are typically forced to make tradeoffs between price and animal welfare. Campaign advertising (i.e., advertising used during the 2008 vote on Proposition 2 in California) may affect how consumers make tradeoffs between price and animal welfare. Neuroimaging data was used to determine the effects of brain activation in dorsolateral prefrontal cortex (dlPFC) on choices making a tradeoff between price and animal welfare and responsiveness to campaign advertising. Results indicated that activation in the dlPFC was greater when making choices that forced a tradeoff between price and animal welfare, compared to choices that varied only by price or animal welfare. Furthermore, greater activation differences in right dlPFC between choices that forced a tradeoff and choices that did not, indicated greater responsiveness to campaign advertising.
... Because of the nature of new food technologies, it is often difficult to use conventional methods to empirically study consumer demand by observing market transactions. People often do not know whether they are eating foods produced with a new technology, and there is insufficient segregation or labeling in the marketplace to separately identify demand for new and old technologies (but see Brooks &Lusk 2010 andDhar &Foltz 2005, among others, for analyses of consumer demand using scanner data). Thus, the most common approach used in the economics literature to measure aversion to new food technologies is the elicitation of willingness to pay either directly through open-ended survey questions or experimental auctions or indirectly through contingent valuation, conjoint analysis, or choice experiments. ...
... In the modeling approach adopted by Swinnen et al. (2011), citizens' perspectives of reality can become biased and distorted, as they are endogenously determined. These modeling approaches suggest that news organizations, and certain nongovernmental organizations, have an incentive to focus on negative aspects of new food technology (for evidence, see Marks & Kalaitzandonakes 2002); that the media can affect consumer's perceptions of new food technologies (e.g., Fox et al. 2002, Kalaitzandonakes et al. 2004, Lusk 2010, McFadden & Lusk 2013; and that, as a result, people may believe that new food technologies are riskier than the facts would suggest. ...
The literature abounds with evidence that consumers are critical of many new technologies used in modern food production. influenced by the work on risk perception and technology acceptance in the 1980s, research has aimed to better understand the controversy around new food technologies. Whereas early contributions focused on risk perception and the lay-expert divide in objective and subjective risk perception, more recent research has turned to the role of emotions, moral judgments, and worldviews. This article takes stock of the theory and findings in this literature. In addition to providing an overview of the developments in the economic and sociopsychological literature, the review discusses selected topics related to consumer preferences for food technology and the determinants of food technology acceptance.
... One often unappreciated issue is the interplay between different policy options. For example, in the months leading up to the vote on Prop 2 in California, Lusk (2010) showed that demand for cage-free and organic eggs rose relative to demand for conventional eggs. While several factors might explain the change in consumer behavior, one likely explanation relates to the increase in information about egg production practices that came about in the media in response to Prop 2 (see also Tonsor and Olynk 2011). ...
... While several factors might explain the change in consumer behavior, one likely explanation relates to the increase in information about egg production practices that came about in the media in response to Prop 2 (see also Tonsor and Olynk 2011). The results from Lusk (2010) suggest that the debate surrounding Prop 2 partially alleviated the need for the proposition in the first place, as it caused consumers to voluntarily shift to those higher-priced options that provide hens more space. Now that Prop 2 has passed, what will happen to the premium previously enjoyed for cage-free and organic eggs, which were often priced at 100% premiums above conventional eggs? ...
Because packaging reaches consumers at the critical moments of purchase and consumption, it has become an important marketing
tool for food manufacturers and retailers. In this paper, I first review how the marketing, health and nutrition claims made
on packaging create “health halos” that make foods appear healthier than they are, thereby leading to higher consumption yet
lower perceived calorie intake. I then show how packaging design (cues, shapes, and sizes) biases people's perception of quantity
and increases their preference for supersized packages and portions that appear smaller than they are. Finally, I examine
the extent to which mandatory nutrition labels, stricter regulation of package claims, public promotion of mindful eating,
and mindless eating nudges could limit the biasing effects of packaging on food perceptions and preferences.
... One often unappreciated issue is the interplay between different policy options. For example, in the months leading up to the vote on Prop 2 in California, Lusk (2010) showed that demand for cage-free and organic eggs rose relative to demand for conventional eggs. While several factors might explain the change in consumer behavior, one likely explanation relates to the increase in information about egg production practices that came about in the media in response to Prop 2 (see also Tonsor and Olynk 2011). ...
... While several factors might explain the change in consumer behavior, one likely explanation relates to the increase in information about egg production practices that came about in the media in response to Prop 2 (see also Tonsor and Olynk 2011). The results from Lusk (2010) suggest that the debate surrounding Prop 2 partially alleviated the need for the proposition in the first place, as it caused consumers to voluntarily shift to those higher-priced options that provide hens more space. Now that Prop 2 has passed, what will happen to the premium previously enjoyed for cage-free and organic eggs, which were often priced at 100% premiums above conventional eggs? ...
This article highlights some key areas where economics can contribute to the current debate about animal welfare. Production
economics reveals that producers will not maximize animal welfare, even if animal well-being is highly correlated with output.
Welfare economics raises thorny issues about the double-counting of benefits when humans exhibit altruism towards animals,
while public economics uncovers potential market failures and possible solutions. Consumer economics provides a means of determining
human and animal benefits from animal well-being policies in dollar terms. Overall, economists have much to contribute to
the animal welfare debate and the well-being of humans and animals could be improved with more economic analysis on the effects
of private and government actions related to animal welfare.
... Finally, cage-free eggs are purchased about 5% of the time, consistent with findings reported by Sumner, Rosen-Molina, and Matthews (2008) and Smith (2010). Because few consumers were aware of animal welfare issues prior to the public debate surrounding the campaign for Proposition 2, it is likely that demand for cage-free eggs changed during the sample period as a result of advertising on either side (Lusk, 2010). Accordingly, our data set incorporates a measure of the number of " yes " and " no " television ads to which each household was likely exposed over the sample period. ...
... Fifth, we find the parameter estimate on the interaction term of cage-free and television advertising (cf bt ad bt ) is positive and statistically significant as expected. Consistent with Lusk (2010), we conclude the 2008 campaign for Proposition 2 had a positive effect on California households' preference for the cage-free attribute. Finally, we find that as household income increases, the probability of purchasing almost all of the brands increases (i.e., i > 0). ...
This study examines the consumer welfare impact of animal welfare legislation mandating cage-free egg production in California. We estimate California egg consumers’ willingness to pay (WTP) for cage-free eggs using household-level purchase data and compare the implied premium to higher production costs when calculating the potential change in consumer surplus. Our findings suggest that larger households and/or households with limited means are most likely to be affected. Furthermore, the implied welfare loss for consumers is approximately $106 million. Although consumers value cage-free eggs, higher production costs result in a net welfare loss to consumers. One implication of this finding is that a clear labeling practice may be a more efficient way to motivate animal welfare and non-cage systems.
... To evaluate the impact of information campaigns on the magnitude of the demand changes, we used the AIDS model estimates to calculate the predicted expenditure shares for each milk and coffee type as in Lusk (2010). Predicted shares are displayed in Figure 12 and Figure 13. ...
The consumption of invasive species could be an opportunity to regulate these species to limit the negative environmental impacts. However, the commercialisation of an exogenous species raises several questions. We assess the acceptance of wels catfish, an invasive species in an alpine lake, and the willingness to pay (WTP) for environmentally friendly and locally produced wels catfish products. The results show that knowledge is an important dimension to explain consumption. Informing consumers about an environmental or local dimension increases WTP for wels catfish, but it does not increase product acceptance. There is no additional premium when both types of information are used together.
... The relevance of awareness and information is also confirmed by the case of the banning of eggs produced in cages in California: the state's Farm Animal Confinement Initiative aims to prohibit any keeping of farm animals that does not allow the animals to lie down, turn around and extend all limbs (Proposition 2). As a result, keeping hens in cages was critically discussed in the mass media, after which the demand for cage-free eggs increased by 180% [19]. Furthermore, Cornish et al. [20] showed that the presence of supplementary information of individual labels significantly increased the likelihood of purchasing products with an animal welfare label compared to the control group, which received the labels without supplementary information. ...
... The coefficients of organic certification and free-range production were both positive and significant, indicating that consumers prefer to buy eggs with organic certification and free-range labels than normal or caged-hen eggs. Indeed, previous studies have found consumers to place a higher part-worth utility on eggs produced in organic and cagefree systems because these are perceived to have been produced with higher standards of production and animal welfare [5,12,36,[49][50][51][52]. In our survey, more than 96% of respondents asserted their belief that organic certification is a significant guarantee of food safety and enhanced nutrition. ...
The potential contribution of nutritionally fortified foods to the improvement of public health has been recognized internationally; however, the extent of people’s preferences for functional foods and the influence of information intervention on consumers’ acceptance and selection of nutritious foods have not been comprehensively studied in China. The main purposes of this study are to assess Chinese consumers’ perceptions towards nutritionally fortified eggs and to explore the ways in which information about the health benefits and the international market status quo of functional eggs impacts Chinese consumers’ preferences and their willingness to pay (WTP) for nutritional fortification. Discrete choice experiments were used to elicit the preferences of 740 egg consumers from four cities in China, and a mixed logit model subsequently utilized to interpret the results. It was found that the provision of comprehensive information regarding the health benefits of trace elements and unsaturated fatty acids, as well as insight into the current market status quo, significantly improved participants’ preferences and their WTP for functional eggs. Furthermore, the heterogeneous effects of demographic and sociocultural factors on consumers’ treatment of this information were explored. It was found that the study participants with children and those with prior purchase experience exhibited a relatively stronger response to the information, while those who had expressed trust in the human health benefits of the nutritional content of functional eggs were not as sensitive as expected to the additional information. Therefore, if the government and enterprises design appropriate information treatment and nudging methods according to the current consumption characteristics of nutritionally fortified eggs, this will help to improve consumers’ purchase confidence in the health efficacy of functional food and play a positive role in promoting people’s healthy food consumption.
... 3 The media surrounding the passage of a policy has been shown to have effects on consumer choice in other contexts. For example, Lusk (2010) found that the debate leading up to a California ballot initiative on animal welfare significantly increased the market share of cage-free and organic eggs in the state, showing that debate around public votes can affect market behavior. There is also related literature on whether implementation of a policy might change underlying preferences. ...
Debate about the economic impacts of sugar‐sweetened beverage (SSB) taxes have largely focused on pecuniary effects, but evidence has emerged that taxes could also convey information about what consumers “should” be doing. Disentangling the pecuniary and non‐pecuniary (or non‐price) effects using market data is a significant challenge. To address this issue, we study consumer choices in a simulated market environment in experimental conditions where we vary the reasons respondents are given for the cause of the price hike. We also study responses to a ban on large‐sized sodas, where the stated causes of the ban are randomly varied across respondents. We utilized random parameter logit models and use difference‐in‐difference estimates to identify the non‐pecuniary effect of a SSB tax and a large soda ban on SSB market shares. Our initial study, conducted in 2016, revealed significant non‐pecuniary effects, with soda choices falling less dramatically when subjects knew prices increased because of a soda tax. However, replications and extensions conducted in 2019 show no consistent non‐pecuniary effects. There is considerable heterogeneity across respondents in the difference‐in‐difference estimates, which is only partially explained by demographic or measured attitudinal variables. Results of this study emphasize the importance of carrying out replications and suggest, at least in the context of our experiment, non‐pecuniary effects are small relative to the traditional economic drivers.
... To evaluate the impact of information campaigns on the magnitude of the demand changes, we used the AIDS model estimates to calculate the predicted expenditure shares for each milk and coffee type as in Lusk (2010). Predicted shares are displayed in Figure 12 and Figure 13. ...
We use two Almost Ideal Demand Systems models on scanner data to analyse the demand for two food products (milk and coffee). Each demand system is composed of four products varying in the presence of an ecolabel (with or without) and the brand (national brand vs private label). First, we aim to compare the demand for PL and NB ecolabeled products. While PLs are brands owned and controlled by retailers and specific to each retailer, NBs are owned and controlled by manufacturers and can be offered by several retailers. Second, we aim to assess the impact of information campaigns designed to raise awareness and knowledge of ecolabels. We find that demand is more elastic for ecolabeled goods as in the literature but we find this result only for NB goods (milk and coffee) and not for PL goods. We also find substitutability between ecolabeled and conventional goods as in the literature but only within the NB goods (milk only) and within the PL goods (milk and coffee). We also find complementarity between NB conventional and PL ecolabeled goods (milk and coffee). Finally, we find that information campaigns increase the predicted expenditure shares of PL organic milk by 33% and of NB fair trade coffee by 50%. But these effects are non-lasting.
... Most of the limited existing work has focused on consumers' willingness to pay for animal welfare-friendly attributes or willingness to vote for banning production practices. Gestation crates/stalls in the swine industry (e.g., McKendree et al., 2013;Nilsson, Foster and Lusk, 2006;Norwood and Lusk 2011;Pozo, Tonsor, and Schroder, 2012; and alternative uses to laying hen cages in the poultry industry (e.g., Chang, Lusk, and Norwood 2010;Heng, Peterson, and Li, 2013;Lusk, 2010;Norwood and Lusk, 2011) have gained the most attention in the agricultural economics literature because these practices have been the focus of ballot initiatives and legislation. Fewer studies have focused on animal welfare in U.S. beef ( Lister et al., 2017) and dairy products (Olynk and Ortega, 2013;Wolf, Tonsor, and Olynk, 2011). ...
The U.S. livestock industry is increasingly faced with pressure to adjust practices in response to societal concerns—specifically related to farm animal welfare. Using best-worst scaling, we determine which practices the U.S. public and cow-calf producers view as the most effective and most practical practices to improve beef cattle welfare. Latent class models are used to understand heterogeneity within and across the public and producers. Fresh, clean feed and water was viewed by most groups as both effective and practical. Furthermore, castrate with pain control and dehorn with pain control were seen as the least effective and practical practices.
... Much like new technology where adoption is unlikely to be fully implemented immediately after introduction, information regarding certification is more likely to follow a diffusion pattern over time with the full effects on demand occurring at some point later. Demand system literature analyzing the effect of new information on consumer demand for foods uses a variety of econometric specifications approaches to capture these effects (Moschini and Meilke, 1989;Eales and Unnevehr, 1993;Kinnucan et al., 1997;Holt and Balagtas, 2009;Lusk, 2010;Dedah et al., 2011). We follow the approach of Tiesl et al. (2002) and Holt and Balagtas (2009) to capture a smooth transition over time from a market with only uncertified Alaska pollock available to one where certified product from the U.S. is available. ...
Ecolabels address the asymmetry of information between producers and consumers regarding credence attributes. If consumers prefer a product with an ecolabel, the label will create product differentiation and a reduction in substitutability between ecolabeled and non-labeled products. Fisheries certification programs for sustainability have rapidly increased their significance within international seafood markets as a mechanism to create market-based incentives for improved global fisheries management and practices by differentiating seafood products with ecolabels. While there exists growing evidence of market benefits in the price dimension, this analysis investigates both price and quantity effects of fisheries certification by testing the hypothesis of structural changes in demand at the import (wholesale) level to determine if, in the period after sustainability certification, there were significant changes in market shares or substitutability between certified and uncertified frozen walleye (Alaska) pollock (Theragra chalcogramma) imported by Germany. A linear, first-differenced, inverse almost ideal demand system (IAIDS), incorporating a dynamic transition function, is used to estimate German imports of certified pollock from the U.S. and uncertified pollock from Russia and China. Results indicate no statistically significant change in market shares, although there were significant effects on the price flexibilities. The price of certified US pollock became less sensitive not only to changes in own quantity of imports but also to changes in import volumes of non-certified Russian pollock. These market changes may provide insight into economic incentives that may have led the Russian government to strengthen its national fisheries management policies to gain certification.
... The same study found that despite (or most likely because of) the large price premium for cage-free eggs, very few consumers are willing to pay for them when no one is looking, and 95% of the eggs sold are conventional white. However, when in 2008 Californian voters were asked whether chickens should have enough room to turn around (proposition 2), they responded with a resounding (63.5%) yes (Lusk 2010). A recent study (Malone and Lusk 2016) suggests that egg prices in California increased by an estimated $0.48 to $1.08 for a dozen eggs, with a surplus loss ranging between $400 and $850 million annually. ...
Consumers are increasingly exposed to labels communicating specific processing aspects of food production, and recent state and federal legislation in the United States has called for making some of these labels mandatory. This article reviews the literature in this area and identifies the positive and negative aspects of labeling food processes. The good parts are that, under appropriate third‐party or governmental oversight, process labels can effectively bridge the informational gap between producers and consumers, satisfy consumer demand for broader and more stringent quality assurance criteria, and ultimately create value for both consumers and producers. Despite the appeal of the “Consumer Right to Know” slogan, process labeling also can have serious unintentional consequences. The bad parts are that consumers can misinterpret these labels and thus misalign their personal preferences and their actual food purchases. The ugly parts are that these labels can stigmatize food produced with conventional processes even when there is no scientific evidence that they cause harm, or even that it is compositionally any different. Based on this review of the literature, we provide three policy recommendations: (i) mandatory labeling of food processes should occur only in situations in which the product has been scientifically demonstrated to harm human health; (ii) governments should not impose bans on process labels because this approach goes against the general desire of consumers to know about and have control over the food they are eating, and it can undermine consumer trust of the agricultural sector; and (iii) a prudent policy approach is to encourage voluntary process labeling, perhaps using smart phone technology similar to that proposed in 2016 federal legislation related to foods containing ingredients that were genetically engineered.
... Scanner data tracks detailed product information with respect to price, identification code, and several other attributes when the product is being purchased at the retail store. It has been applied to an increasing number of food products in the market valuation of product characteristics (e.g., Lusk, 2010;Kim and Chung, 2011;Roheim et al., 2011). ...
Hedonic modeling and retail scanner data were utilized to investigate the influence of local, organic, nutrition benefits,
and other attributes of shell eggs on retail price premium in Hawaii. Within a revealed preference framework, the analysis
of local and organic attributes, simultaneously, under a single unified setting is important, as such work is highly deficient
in the published literature. This paper finds high to moderate price premiums in four key attributes of shell eggs – organic
(64%), local (40%), nutrition benefits claimed (33%), and brown shell (18.4%). Large and extra-large sized eggs also experience
price premiums over medium sized eggs. With each larger packing size, the estimated coefficients were negative, indicating
a price discount, relative to the baseline packing size. However, there is no evidence to support the overwhelming influence
of “local” over “organic”, as hypothesized in other research work. Overall, the findings in this paper suggest industry producers
and retailers should highlight and market effusively the primary attributes of their shell eggs, including “local”, to remain
competitive in the marketplace. Effective communication channels are crucial to delivering the product information, capturing
the attention of consumers, and securing retail sales.
... This may not necessarily lead to a reduction in consumer welfare, since consumers may voluntarily choose to switch their purchases to higher standard products. For example, a recent study of the demand for eggs in California has concluded that publicity associated with egg production practices generated by the campaign over Proposition 2 caused a shift in demand from eggs from caged birds to cage free and organic eggs during the period leading up to the vote (Lusk 2010). It is unclear if this reflects a permanent shift in preferences and increased willingness to pay for eggs produced under more costly systems, but such a possibility cannot be ruled out. Figure 18.2 assumes that consumers do not have access to any competing supplies of products that are not forced to absorb the increase in production costs created by the higher standard, i.e., that there is a closed market. ...
The welfare of farm animals is an increasingly important issue for the U.S. food and agricultural system. Dramatic improvements in productivity have contributed to lower consumer prices for animal products, but critics contend that this has been at the expense of the well-being of farm animals. The food and agricultural industry has responded to concerns by adopting a range of voluntary schemes designed to improve farm animal welfare. However, a range of activist groups, some of whom would like to see the elimination of animal agriculture entirely, have been increasingly successful in pressing for tighter regulation, particularly at the state level. The proliferation of regulations is likely to impose additional costs on producers and could place them at a competitive disadvantage. Despite the likelihood that higher standards will increase production costs, it would be extremely risky for the industry not to take a proactive approach to the animal welfare issue. A combination of strengthened voluntary actions, supported by more stringent penalties for those who fail to follow accepted practices, could satisfy the welfare concerns of the vast majority of Americans who wish to continue to consume animal products.
... Scanner data have been successfully applied to study attributes of a number of food products, including frozen fish (Roheim, Asche, Santos, 2011;Roheim, Gardiner, and Asche, 2007), eggs (Kim and Chung, 2011;Lusk, 2010), tomatoes (Keahiolalo, 2013), and so forth. The Nielsen scanner data set in this study is sourced from three major grocery chains with a total of 19 stores in the Honolulu metropolitan area. ...
This article utilizes the 2011 Nielsen scanner data for the Honolulu fresh tomato market to explore the existence of price premium for local food. Hedonic analysis is conducted to delineate the price impact of the local attribute. Contrary to the widely perceived local price premium in the consumer preference literature, mixed results of price premiums and discounts are discovered for local tomato products. Additional investigation suggests that the prices of local tomatoes are likely influenced by seasonal output fluctuation. The limited market distribution capacity facing local producers may have contributed further to the retail discounting.
... Following e.g. Piggott and Marsh (2004), Kalaitzandonakes et al. (2004), Adhikari et al. (2006), Lusk (2004), Schmidt and Kaiser (2003) and Tonso and Olynk (2010) we base our information index on articles (unweighted or weighted by readership) in the popular press. Information about pesticides in conventional vegetables and information that link consumption of organic vegetables with health are found by an extensive search in the database Infomedia, which covers articles in all Danish newspapers. ...
Based on a unique and very detailed panel dataset covering consumption of organically and conventionally produced vegetables in the years 2005 - 2007, we examine the effects of information about positive health effects of consuming organic vegetables and information about negative health effects of consuming conventional vegetables on demand for organic foods for six different segments of Danish households. Three of these segments are positive towards organics whereas the remaining three segments are negative or indifferent. Using the double hurdle model we estimate partial effects of both directly and indirectly obtained information as well as prices. The results show, that there are larger effects of information for households where the information is in accordance with initial knowledge and attitudes, hence the positive segments react more to information whereas the negative segments react more to prices. “New” consumers can be persuaded to buy organic vegetables by providing information about the negative health effects of consuming conventional vegetables since it increases the probability of an organic purchase. Once consumers have entered the organic marked for vegetables, information that link health and the consumption of organic vegetables will increase consumption. The results are important for firms and producers who want to successfully target information to different consumer groups with the aim of increasing the market share for organic food.
... The number of parameters to be estimated increases exponentially as the number of products increases. Traditional demand approaches that use product-space concept, such as AIDS and Rotterdam models, attempt to solve the dimensionality problem by aggregating individual products (e.g., Lusk, 2010;Anders and Moeser, 2008) and using multi-budgeting to group products into a reduced number of categories (e.g., Hausman, Leonar, and Zona, 1994). However, both methods require prior groupings and assumptions of product relationships within categories, which are subjective and may yield inconsistent results due to researchers' different opinions on grouping. ...
... Scanner data tracks detailed product information with respect to price, identification code, and several other attributes when the product is being purchased at the retail store. It has been applied to an increasing number of food products in the market valuation of product characteristics (e.g., Lusk, 2010;Kim and Chung, 2011;Roheim et al., 2011). ...
With retail scanner data, we applied hedonic price modeling to explore price premiums for organic, local, and other product attributes of fluid milk in Hawaii. Within the context of revealed preference, this analysis of organic and local attributes, under a single unified framework, is significant, as research in this area is deficient in the existing literature. This paper finds both organic and local attributes delivered price premiums over imported, conventional, whole fluid milk. However, the estimated price premium for organic milk (24.6%) is significantly lower than findings in the existing literature. Likewise, the price premium for the local attribute is estimated at 17.4%, again substantially lower compared with an earlier, stated preference study in Hawaii. Beyond that, we estimated a robust price premium of 19.7% for nutritional benefits claimed. The magnitude of this estimated coefficient reinforces the notion that nutrition information on food is deemed beneficial and valuable. Finally, package size measures the influence of product weight. With each larger package size, the estimate led to a corresponding larger price discount. This result is consistent with the practice of weight discounting that retailers usually offer with fresh packaged food. Additionally, we estimated a fairly high Armington elasticity of substitution, which suggests a relatively high degree of substitution between local and imported fluid milk when their relative price changes. Overall, this study establishes price premiums for organic, local, and nutrition benefits claimed for fluid milk in Hawaii.
Copyright © 2015 American Dairy Science Association. Published by Elsevier Inc. All rights reserved.
... that other factors associated with meat production are more important than animal welfare attributes in a sample of European meat consumers, while Gracia, Louriero, and Nayga (2009) find a statistically significant premium of approximately 0.42 Euro for ham marked with a label indicating that it was produced using methods that respect the animal's welfare. Among studies that estimate the demand impact of Proposition 2 using secondary data, Lusk (2010) interprets the media advertising during the campaign for and against Proposition 2 as an exogenous shock to demand. Comparing the demand for regular and cage-free eggs in California with the demand in a market not subject to Proposition 2 advertising, he finds that the demand for cage-free eggs increased by 180% over the period of the campaign. ...
Spending on political advertising increases with every election cycle, not only for congressional or presidential candidates, but also for state‐level ballot initiatives. There is little research in marketing, however, on the effectiveness of political advertising at this level. In this study, we conduct an experimental analysis of advertisements used during the 2008 campaign to mandate new animal welfare standards in California (Proposition 2). Using subjects' willingness‐to‐pay for cage‐free eggs as a proxy for their likely voting behavior, we investigate whether advertising provides real information to likely voters, and thus sharpens their existing attitudes toward the issue, or whether advertising can indeed change preferences. We find that advertising in support of Proposition 2 was more effective in raising subjects' willingness‐to‐pay for cage‐free eggs than ads in opposition were in reducing it, but we also find that ads in support of the measure reduce the dispersion of preferences and thus polarize attitudes toward the initiative. More generally, political ads are found to contain considerably more “hype” than “real information” in the sense of Johnson and Myatt [Johnson, J. P., and D. P. Myatt. “On the Simple Economics of Advertising, Marketing and Product Design.” American Economic Review, 96, 2006, 756–84].
... There are far fewer studies about eggs. However, a recent study showed that demands for eggs in two US cities associated with cage-free and organic processes are on the rise, but the reported own-price elasticities tend to be higher in absolute value for these types of eggs (at around -3) than for conventional eggs (at around -1) (Lusk, 2010). ...
The objective of this document is to provide non-economists the analytical tools to understand the economics of Canada's supply management programs. It begins with an overview of Canada's supply management programs and a discussion about their history. It then provides a review of basic economic concepts needed to understand how supply management policies affect the behavior of agents along supply chains. Interprovincial and international issues are discussed and differences between supply chains with and without supply management are analyzed.
... Norwood and Lusk (2011), for example, report that consumers believe a much higher share of eggs are produced in cage free systems than actually are. Lusk (2010) also showed that media surrounding the aforementioned California ballot initiative led to an increase in demand for organic and cage free eggs; a phenomenon likely related to the fact that consumers are relatively unknowledgeable of the issue and are responding to social cues. ...
Understanding how consumers respond to information about animal production systems is important both for animal activist groups and for agricultural producers alike. This is particularly true as information conveyed over platforms such as YouTube both decrease the cost of communication and increase the speed at which interested parties can communicate with the public. The emerging field of neuroeconomics, which integrates the findings of economics, psychology, and neuroscience, can provide unique insights into consumer responses. The purpose of this research is to enhance understanding of consumers’ perceptions of farm animal welfare by capitalizing on recent developments in economics and neuroscience.
... 5 Cotterill (1994) argues that even with aggregation, the market data contained in IRI Infoscan data allows for a rich set of possible empirical insights. For example, several researchers have used Infoscan data to investigate the effect of other types of labels: Lusk (2010) provides an evaluation of demand for cage free, organic and conventional eggs, and and in analyses of the competition between national and private labels of breakfast cereals and carbonated beverages. ...
Ecolabelling is an increasingly important tool used in the promotion of sustainable forestry and fishery products around the world. Whether the consumer is actually paying a price premium for ecolabelled products is of fundamental importance as it indicates a return on the investment of sustainable practices, providing an incentive for producers to undertake such practices. This article seeks to address the question of whether or not an actual premium is being paid by consumers for ecolabelled seafood by conducting a hedonic analysis of Marine Stewardship Council (MSC)‐certified frozen processed Alaska pollock products in the London metropolitan area in the UK market using scanner data. Regression results show a statistically significant premium of 14.2%. This implies the presence of market differentiation for sustainable seafood and the potential of the MSC’s fisheries certification programme to generate market incentives for sustainable fisheries practices.
... Interested readers are referred to additional details regarding Proposition 2 provided byLusk (2010). ...
Abstract This article provides the first known examination of how animal welfare information provided by media sources impacts beef, pork and poultry demand. Results suggest that media attention to animal welfare has a small, but statistically significant impact on meat demand. Long-run pork and poultry demand are hampered by increasing media attention whereas beef demand is not directly impacted. Loss in consumer demand is found to come from exiting the meat complex rather than spilling over and enhancing demand of competing meats. An outline of economic implications is provided for the broader discussion of animal welfare.
This study addresses the puzzle of animal welfare regulations consistently passing by majority votes, despite potential welfare losses evident in market data. To understand this phenomenon, we propose a conceptual framework that considers two possibilities: first, animal welfare might not be valued in the market, as suggested by classical externality analysis, and second, it could be valued due to altruistic motivations. To illustrate the framework, we uncover the motives driving consumers’ demand for animal welfare products jointly utilizing the results of a discrete choice experiment and respondents’ perception data obtained in China. Our findings align with the predictions made by classical externality analysis, indicating that the public good aspect of animal welfare is not valued in this market and thereby challenging the existence of altruistic behavior. Moreover, our analysis of consumer heterogeneity reveals that as consumers’ knowledge increases, they exhibit a decreased inclination to prioritize the animal welfare attribute for fulfilling their private needs, and may raise concerns about the safety of animal welfare‐friendly products.
Increasing use of recycled water to irrigate agricultural products and decreasing consumption of bottled water are important components of sustainable water management practices and consumer‐driven efforts to improve water security and quality. However, consumers frequently discount agricultural products irrigated with recycled water relative to products irrigated with conventional water and place a premium on bottled water relative to tap water. This study measures consumer attitudes regarding recycled water and bottled water to understand more fully the reasons behind these preferences. We conduct two studies involving 2,616 adult consumers in the United States designed to measure consumer attitudes and preferences: the use of recycled water versus conventional water to irrigate food products and tap water versus bottled water for drinking. In each study, implicit attitudes are measured using an Implicit Association Test as well as explicit attitudes. We find that respondents have negative implicit attitudes regarding recycled water compared to conventional water and tap water compared to bottled water, and a negative explicit attitude toward recycled water. Tap water and food grown with recycled water were believed to be less healthy to consume and less tasty, although these are believed to be more sustainable options. Beliefs about water attributes (i.e., healthfulness, taste, and sustainability) are associated with attitudes, and both beliefs about attributes and attitudes are associated with preferences for products. Further, we find that respondents' stated preferences are consistent with their implicit and explicit attitudes.
There is limited research on the effects of animal welfare reforms, such as transitions from caged to cage-free eggs, on attitudes toward animal farming. This preregistered, randomized experiment (n = 1,520) found that participants provided with information about current animal farming practices had somewhat higher animal farming opposition (AFO) than participants provided with information about an unrelated topic (d = 0.17). However, participants provided with information about animal welfare reforms did not report significantly different AFO from either the current-farming (d = −0.07) or control groups (d = 0.10). Although these latter effects on AFO were small and nonsignificant, they appeared to be mediated by changes in perceived social attitudes toward farmed animals and optimism about further reforms to factory farming. Exploratory analysis found no evidence that hierarchical meat-eating justification or beliefs about how well-treated farmed animals currently are mediated the effect. Further research is needed to better understand why providing information about animal welfare reforms did not substantially increase AFO overall, whereas providing information about current practice did somewhat increase AFO.
Consumers ascribing value to animal welfare related attributes has become a common interest for various stakeholders. This study investigated heterogeneous consumer preferences for eggs from the welfare enhanced production systems, and further, how the effects of information regarding these production systems depended on consumers’ previous purchase experience and initial perceptions. A nationally representative sample of respondents completed a self-reported survey and a set of discrete choice experiments on egg products. Respondents were randomly assigned into two groups, with one group being offered additional information regarding the pros and cons of each housing system on various aspects (i.e., animal welfare and environmental impacts). Using the conditional logit models, results showed that consumers’ willingness to pay (WTP) for egg attributes depended on previous purchase experience. Those who had purchased cage-free eggs before were willing to pay up to $1.39/dozen higher premium for the advanced cages. Furthermore, the informational impacts depended on consumers’ purchase experience and initial perceptions. Inexperienced consumers were more responsive to information compared to the experienced consumers. The mixed information decreased price premium by up to 75%. Inexperienced consumers with higher perceived importance on welfare or environmental issues showed even more preference updates. While the prior attitudes helped the experienced consumers to differentiate across products, additional information lowered these attitudinal effects. These results implied that information that aimed to educate the general public had higher marginal effects on the inexperienced consumers than on the experienced ones.
Background
During the last decades, several challenges have significantly affected the egg industry, such as the increasing consumer demand for animal welfare, the need for more sustainable food production, and the growing human health and food security issues related to egg consumption. The industry has responded by supplying a large variety of new eggs in the market. A better understanding of consumer behaviour, perceptions, and preferences for eggs is vital for industries to efficiently meet the expected, growing, and complex consumer demand.
Scope and approach
The focus of this review is threefold: (i) to identify the main factors that drive consumer behaviour perceptions, and preferences towards eggs; (ii) to discuss implications for industries and policy makers; and (iii) to identify research gaps to be addressed in future studies. A total of 34 consumer studies were identified, reviewed, and discussed.
Key findings and conclusions
Consumer preferences for eggs are mainly driven by intrinsic and extrinsic characteristics, as well as socio-cultural factors. While price is very important, especially in developing countries, production method in developed countries is a relevant sub-factor, from which consumers make inferences about the health, safety, and sensory properties of eggs. Sensory properties, like eggshell, yolk colours, and size, are also main determinants of egg purchases. Egg producers should better inform consumers about the differences between the various methods of production and the sensory properties of eggs. Finally, this review revealed the need to investigate more factors beyond intrinsic and extrinsic product characteristics as well as the lack of consumer studies in developing countries and on the growing plant-based egg trend.
Enormous quantities of data are generated through social and online media in the era of Web 2.0. Understanding consumer perceptions or demand efficiently and cost effectively remains a focus for economists, retailer/consumer sciences, and production industries. Most of the efforts to understand demand for food products rely on reports of past market performance along with survey data. Given the movement of content-generation online to lay users via social media, the potential to capture market-influencing shifts in sentiment exists in online data. This analysis presents a novel approach to studying consumer perceptions of production system attributes using eggs and laying hen housing, which have received significant attention in recent years. The housing systems cage-free and free-range had the greatest number of online hits in the searches conducted, compared to the other laying hen housing types. Less online discussion surrounded enriched cages, which were found by other methods/researchers to meet many key consumer preferences. These results, in conjunction with insights into net sentiment and words associated with different laying hen housing in online and social media, exemplify how social media listening may complement traditional methods to inform decision-makers regarding agribusiness marketing food systems management and regulation. Employing Web-derived data for decision making within agri-food firms offers the opportunity for actionable insights tailored to individual businesses or products.
Since January 2015, California has required that all shell eggs consumed in the state be produced cage free or by hens housed in enlarged cages defined under Assembly Bill 1437. This paper assesses the effects of California farm animal housing restrictions on egg prices and production practices inside and outside California, and on the volume of interstate trade. We find that the California regulation generated short‐ and long‐run egg price increases across the U.S. It has also bifurcated production methods outside California yielding more concentrated interstate trade. The largest share of the associated private costs was borne by out‐of‐state consumers. The balance between a state's power to regulate food production within its borders and the impacts on out‐of‐state producers and consumers has potential legal implications under the dormant Commerce Clause of the U.S. Constitution.
Why would people vote to ban a product they regularly consume? This question is at the crux of the controversies over a variety of ballot initiatives restricting certain agricultural production practices. This research moves the question to a controlled laboratory setting with real food and real money to explore the underlying causes of the so-called vote-buy gap. Respondents first made a shopping choice between snack options, some of which included eggs from caged hens as an ingredient. After selecting a snack, participants then voted on a proposition to ban snack options that utilized eggs from caged hens. We show that the vote-buy gap can be replicated in the lab: in the control condition, approximately 80% of the individuals who chose snacks with caged eggs when shopping subsequently voted to ban snacks with caged eggs. The finding rules out the suggestion that the vote-buy gap is an illusion or statistical artifact, as it can be re-created in an experimental lab setting at an individual level. A number of experimental treatments were conducted to test hypotheses related to the underlying causes of the vote-buy gap. We found qualified support for the hypothesis that the vote-buy gap is a result of information asymmetries, but little evidence that it results from public good or expressive voting phenomena.
Most large US food retailers and restaurants have made pledges to sell only cage‐free eggs. If the pledges are upheld, about 75% of the egg laying flock will have to be converted to cage‐free by the year 2025. However, it is an open question as to whether the market will support such a change. To address this issue, a national survey of over 2,000 US egg consumers was conducted to estimate cage‐free egg demand among consumers exposed to different types of information. We find a high degree of heterogeneity in willingness‐to‐pay (WTP) for cage‐free eggs. Half of the consumers are WTP no more than a 1.16/dozen, suggesting a small fraction of consumers are willing to pay sizeable amounts for the cage‐free label. Ultimately, the results suggest there is potential for the market‐share for cage‐free eggs to rise above the current state even at premiums as high as $1.00/dozen. However, even at much more modest price premiums, the potential for cage‐free eggs to attain majority market share is unlikely, particularly if conventional eggs advertise other desirable attributes. We also find that retailers who completely remove more affordable, conventional eggs are likely to experience a significant increase in the share of consumers who choose not to buy eggs.
After California voters decided in a state initiative to ban gestation crates and battery cages, some are asking whether other states will host similar initiatives and if they will pass. This study addresses this question by using voting data in California to predict how voters in other states would respond to a similar initiative. Results suggest that a number of states allow such initiatives and possess a demographic profile favorable to the initiative's passage. However, because these states host only a small portion of the livestock population, the impact of such initiatives on the well-being of farm animals is questionable.
This article provides a means for testing whether buyers or sellers are responsible for a drop in sales following a market shock. We show that suppliers’ responses dominated the market reaction to the 2006 US Food and Drug Administration warning to avoid fresh spinach contaminated with potentially deadly bacteria Escherichia coli O157:H7. A modified Durbin-Wu-Hausman test for temporary price endogeneity is developed and used in a leafy green vegetable demand model. Test results indicate the price of bagged spinach was exogenous before the announcement but endogenous for approximately 12 weeks afterward. We show these results are consistent with the notion that suppliers temporarily limited the availability of spinach to consumers. Instead of consumers choosing the quantity purchased given exogenous prices, it was suppliers who limited the quantity marketed and consumers’ choices established the market price.
Health and safety officials are sometimes placed in an awkward position: knowing that a foodborne disease outbreak is occurring but not knowing which food is responsible. They have to advise consumers, but relying on ambiguous and evolving information raises the question, how do consumers respond to changing advice? Here, we estimate a model of the retail demand for tomatoes in the USA, accounting for the 2008 events in the USA in which consumers were advised that some types of tomatoes were contaminated with Salmonella bacteria, and later were advised that tomatoes were safe and peppers were not. Using the quantity of news media attention given to the Salmonella issue, we show that consumers generally responded to the advice that tomatoes were contaminated, but did not respond to the declaration that tomatoes were safe. The magnitude of response to contemporaneous news depended on the extent of coverage in previous weeks.
The majority of studies on consumer demand for organic products neglect the presence of non‐organic competitors, ignoring their effect on consumer demand for organics. This article uses a demand system which includes both organic and non‐organic fruits and vegetables, with actual (as opposed to stated) data for household purchases. Estimation of our model provides empirical evidence on the interrelationships between organic and non‐organic products, as the relevant cross‐price elasticities. Own‐price elasticities indicate that organic fruits and vegetables are more price elastic than their non‐organic counterparts, and that lower social class households with children have the most own‐price elastic demand. Cross‐price elasticities indicate relatively strong loyalty to organic products.
For much of human history, most of the population lived and worked on farms but today, information about livestock is more likely to come from children's books than hands-on experience. When romanticized notions of an agrarian lifestyle meet with the realities of the modern industrial farm, the result is often a plea for a return to antiquated production methods. The result is a brewing controversy between animal activist groups, farmers, and consumers that is currently being played out in ballot boxes, courtrooms, and in the grocery store. Where is one to turn for advice when deciding whether to pay double the price for cage-free eggs, or in determining how to vote on ballot initiates seeking to ban practices such as the use of gestation crates in pork production or battery cage egg production? At present, there is no clear answer. What is missing from the animal welfare debate is an objective approach that can integrate the writings of biologists and philosophers, while providing a sound and logical basis for determining the consequences of farm animal welfare policies. What is missing in the debate? Economics. This book journeys from the earliest days of animal domestication to modern industrial farms. Delving into questions of ethics and animal sentience, the authors use data from ingenious consumers' experiments conducted with real food, real money, and real animals to compare the costs and benefits of improving animal care. They show how the economic approach to animal welfare raises new questions and ethical conundrums, as well as providing unique and counter-intuitive results.
This paper analyzes price differentials among conventional, cage-free, organic, and Omega-3 eggs using retail scanner data from two regional markets and the United States as a whole. Results reveal significant premiums attributable to cage-free (a 57% premium on average) and organic (an 85% premium on average). However, significant variation exists among geographic locations; price premiums for organic over conventional eggs in Dallas are almost twice as high as those in San Francisco. Estimates indicate that about 42% of the typically observed premium for cage-free eggs over conventional eggs (and 36% of the premium for organic eggs) can be attributed to egg color rather than differences in hens’ living conditions. Despite the large implicit price premiums for cage-free and organic, our data reveal that most shoppers are not willing to pay such high prices for cage-free and organic attributes.
The separability hypothesis and expenditure as an exogenous variable in a system of conditional demands are analyzed. Expenditure cannot be weakly exogenous in a system of conditional demands specified as functions of the prices of the separable goods and total expenditure on those goods. Furthermore, expenditure is uncorrelated with the residuals of the conditional demand equations only when severe restrictions are satisfied. Therefore, expenditure will seldom be strictly exogenous. Econometric methods are presented for the consistent and efficient estimation of the unknown parameters when expenditures is correlated with the residuals and when it is not.
This article reports the results form a series of laboratory auction markets in which consumers bid on meat characteristics. The characteristics examined include meat traceability (i.e., the ability to tract the retail meat back to the farm or animal of hormones, or knowing the animal was humanely treated), and extra assurances (e.g., extra meat safety assurances). This laboratory study provides non-hypothetical bid data on consumer preferences for a sample of consumers in Logan, Utah, for traceability, transparency, and assurances (TTA) in red meat at a time when the United States currently lags other countries in development of TTA meat systems. Results suggest these consumers would be willing to pay for such TTA meat characteristics, and the magnitude of the consumer bids reveals that a profitable market for development of TTA systems in the United States might exist.
A methodology for estimating a demand system from household survey data is developed and applied to the 1987-88 Nationwide Food Consumption Survey data. The empirical results are sets of estimated demand elasticities for households segmented with different income levels. In addition, we apply these demand elasticities to estimate the implied nutrient elasticities for low-income households. The estimation results are useful in evaluating some food policy and program effects related to households of a specific income level.
U.S. per capita shell egg consumption has declined steadily since 1955 despite a falling real price. This paper investigates how information about cholesterol, as measured by a newly constructed index based on medical journal articles, has affected U.S. demand for shell eggs. The results of a fixed coefficient model indicate that information on the links between cholesterol and heart disease had decreased per capita shell egg consumption by 16% to 25% by the first quarter of 1987. A simple changing coefficient model indicates that cholesterol information has changed shell eggs’ own price and income elasticities, so that the 1955–87 falling egg price and rising income increased egg consumption less than they otherwise would have.
This paper develops a valuation method which generates consistent and systematic estimates of people's preferences for complex multi-attribute goods by inextricably linking auction bids with conjoint ratings. The advantage of the valuation approach is that it permits the estimation of people's values for many potential goods, allows one to decompose people's values for a good into its sub-components, and permits the study of preference heterogeneity without distributional assumptions. We apply the method to an important and increasingly controversial topic: animal welfare. The method is used to determine people's preferences for eggs and pork produced from different production systems. Data from experiments conducted in three diverse U.S. locations (Chicago, IL; Dallas, TX; and Wilmington, NC) indicates that people are, on average, willing to pay 2.02 more for two-pounds of pork chops raised in a pasture system as opposed to a crate system.
The authors investigate pricing and demand issues for four fresh potato categories (russet, red, white, and minor colored), organic fresh potatoes, and two processed potato categories (frozen|refrigerated and dehydrated) using a nonlinear generalized almost ideal demand system (GAIDS) that is closed under unit scaling (CUUS). The model used regionally aggregated at-home consumption data from 2000 to 2005. Estimated uncompensated own price elasticities for fresh potatoes were highly significant and ranged between −0.5 and −1.6. The study was designed to capture the effects of the aggregate organic market on the prices, expenditures, and demand for each potato category. Organic food market penetration elasticities suggest that specialty potatoes (organic and minor-colored) are particularly well positioned if demands for organic products continue to rise, red potatoes are not well positioned and evidence of the early warning signs of slippage in market share for white and russet potatoes may exist. Producers and promoters of conventional potato products should account for the increasingly important role of organic products in making decisions. As an auxiliary exercise, we also statistically sourced the variance of the organic potato price premium relative to the other four fresh potato prices. At the present time, the variability of the organic potato premium is not much affected by production costs or other supply-related factors: the premium variability was driven largely by demand, and demographic|seasonal factors. Producers should be cautious about shifting to organic potato production until lower cost practices emerge. [JEL Codes: D120, Q130, Q180]. © 2009 Wiley Periodicals, Inc.
Consumers are increasingly interested in how animals are handled, transported, and cared for. This study provides the first examination of US resident support for a ballot initiative banning use of gestation crates (stalls) in the swine industry. Results suggest latent associations consumers possess between gestation crate use and perceptions of food safety, pork quality, and farm size are more influential determinants of ban support than observable socioeconomic factors. Implications for consumer groups, policy makers, and the swine industry are assessed. Moreover, several suggestions for valuable future research are outlined.
Price and expenditure elasticities at retail level for 11 fresh fruits and 10 fresh vegetables were estimated by employing a composite demand system approach and using annual data. Most fresh fruits and vegetables were found to respond significantly to changes in their own prices but insignificantly to changes in total expenditures. The demand for fresh fruit group appeared to have had a clear upward trend since 1973. However, no significant trends were found in the demands for individual fresh fruits or vegetables. The study partially incorporated the interdependent demand relationships between fresh fruits (vegetables) and all other commodities, yet effectively avoided the problem of insufficient degrees of freedom.
Consumer preferences and willingness-to-pay (WTP) for certain non-market food process attributes were investigated using a choice experiment. Swedish consumers were found to be willing to pay a price premium for the use of mobile abattoirs for cattle but not for broilers. We used two different survey versions, with and without an opt-out alternative. There is no evidence that omission of the opt-out alternative leads to biased choices. In addition, respondents who chose to opt-out were no different from those making trade-offs between attributes. The inclusion of an opt-out alternative has no significant effect on the marginal WTP. Based on estimated distributions of WTP and available cost estimates, the market share for mobile abattoirs is predicted. Here we do find differences between the two survey versions: the version with an opt-out alternative revealed greater unobserved heterogeneity.
Sales of private goods with affiliated public good attributes have markedly risen in recent years. This fact is difficult to explain within the paradigm of purely self-interested behavior. This paper investigates factors influencing consumer demand for pork products with certifications related to the environment, animal welfare, and antibiotics. Using psychometric scaling techniques, we measure individuals’ degree of altruism and propensity toward free riding. Results of a random parameter logit model applied to choice data obtained from a nationwide survey in the United States indicates that more altruistic individuals are willing to pay more for pork products with public good attributes than less altruistic individuals and free riders. These results indicate that private purchases of goods with public-good attributes are not simply a result of individuals’ perceptions of the ability to mitigate private risks such as food safety, but that individuals are making private choices to affect public outcomes. Results have implications for policy makers weighing the relative costs and benefits of food labeling policies versus bans related to certain livestock production practices. Copyright Springer Science+Business Media, Inc. 2007
This article uses revealed preferences of consumers to study the consumer benefits from rBST-free and organic labeled milk. The article specifies and estimates a quadratic AIDS demand system model for different milk types using U.S. supermarket scanner data. The introduction of rBST-free and organic milk is used to estimate consumer benefits that are decomposed into two components, competitive and variety effects. Results show significant consumer benefits from organic milk and to a lesser extent from rBST-free milk. Based on the findings, we explore implications for present U.S. labeling standards. Copyright 2005 American Agricultural Economics Association.
This article explores the issue of price and expenditure endogeneity in empirical demand analysis. The analysis focuses on
the U.S. carbonated soft drink market. We test the null hypothesis that price and expenditures are exogenous in the demand
for carbonated soft drinks. Using an almost ideal demand system (AIDS) specification, we strongly reject exogeneity for both
prices and expenditures. We find that accounting for price/expenditures endogeneity significantly impacts demand elasticity
estimates. We also evaluate the implications of endogeneity issues for testing weak separability.
Intercepts of share equations generally include demand shift variables. In the Almost Ideal demand system and related models, this results in estimates that depend on units of measurement. Solutions to this problem are identified and discussed.
This paper presents the method and findings of a contingent valuation (CV) study that aimed to elicit United Kingdom citizens’ willingness to pay to support legislation to phase out the use of battery cages for egg production in the European Union (EU). The method takes account of various biases associated with the CV technique, including ‘warm glow’, ‘part-whole’ and sample response biases. Estimated mean willingness to pay to support the legislation is used to estimate the annual benefit of the legislation to UK citizens. This is compared with the estimated annual costs of the legislation over a 12-year period, which allows for readjustment by the UK egg industry. The analysis shows that the estimated benefits of the legislation outweigh the costs. The study demonstrates that CV is a potentially useful technique for assessing the likely benefits associated with proposed legislation. However, estimates of CV studies must be treated with caution. It is important that they are derived from carefully designed surveys and that the willingness to pay estimation method allows for various biases.
Ever since Richard Stone (1954) first estimated a system of demand equations derived explicitly from consumer theory, there has been a continuing search for alternative specifications and functional forms. Many models have been proposed, but perhaps the most important in current use, apart from the original linear expendi- ture system, are the Rotterdam model (see Henri Theil, 1965, 1976; Anton Barten) and the translog model (see Laurits Christensen, Dale Jorgenson, and Lawrence Lau; Jorgen- son and Lau). Both of these models have been extensively estimated and have, in addition, been used to test the homogeneity and symmetry restrictions of demand the- ory. In this paper, we propose and estimate a new model which is of comparable gener- ality to the Rotterdam and translog models but which has considerable advantages over both. Our model, which we call the Almost Ideal Demand System (AIDS), gives an ar- bitrary first-order approximation to any de- mand system; it satisfies the axioms of choice exactly; it aggregates perfectly over consumers without invoking parallel linear Engel curves; it has a functional form which is consistent with known household-budget data; it is simple to estimate, largely avoid- ing the need for non-linear estimation; and it can be used to test the restrictions of homogeneity and symmetry through linear restrictions on fixed parameters. Although many of these desirable properties are possessed by one or other of the Rotterdam or translog models, neither possesses all of them simultaneously. In Section I of the paper, we discuss the theoretical specification of the AIDS and justify the claims in the previous paragraph. In Section II, the model is estimated on postwar British data and we use our results to test the homogeneity and symmetry re- strictions. Our results are consistent with earlier findings in that both sets of restric- tions are decisively rejected. We also find that imposition of homogeneity generates positive serial correlation in the errors of those equations which reject the restrictions most strongly; this suggests that the now standard rejection of homogeneity in de- mand analysis may be due to insufficient attention to the dynamic aspects of con- sumer behavior. Finally, in Section III, we offer a summary and conclusions. We be- lieve that the results of this paper suggest that the AIDS is to be recommended as a vehicle for testing, extending, and improving conventional demand analysis. This does not imply that the system, particularly in its simple static form, is to be regarded as a fully satisfactory explanation of consumers' behavior. Indeed, by proposing a demand system which is superior to its predecessors, we hope to be able to reveal more clearly the problems and potential solutions asso- ciated with the usual approach. I. Specification of the AIDS
Does Food Safety Information Impact U.S. Meat Demand? Ballot Watch: Proposition 2: Standards for Confining Farm Animals
- Lusk
- N E Piggott
- T L Marshm
- Kaiser
Lusk: Proposition 2 and Egg Demand Brought to you by | Nipissing University Authenticated Download Date | 10/2/14 6:19 PM Piggott, N.E. and T.L. Marsh. " Does Food Safety Information Impact U.S. Meat Demand? " American Journal of Agricultural Economics 86(2004):154-174. Sacramento Bee, " Ballot Watch: Proposition 2: Standards for Confining Farm Animals. " September 27, 2008. http://www.sacbee.com/capitolandcalifornia/story/1269685.html Schmit, T.M. and H.M. Kaiser. " Egg Advertising, Dietary Cholesterol Concerns, and U.S. Consumer Demand. " Agricultural and Resource Economics Review 27(1998):43-52.
Animals in the Agrarian Ideal Journal of Agricultural and Environmental spec suppl
- Thompson