Welfare Effects of Food Labels and Bans with Alternative Willingness to Pay Measures

We study the welfare effects of offering choice over coverage levels—“vertical choice”—in regulated health insurance markets. We emphasize that heterogeneity in efficient coverage level is not sufficient to motivate choice. When premiums cannot reflect individuals’ costs, it may not be in consumers’ best interest to select their efficient coverage level. We show that vertical choice is efficient only if consumers with higher willingness to pay have a higher efficient level of coverage. We investigate this condition empirically and find that as long as a minimum coverage level can be enforced, the welfare gains from vertical choice are either zero or economically small. (JEL D82, G22, H75, I13, I21)

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A Quantitative Analysis of the Used-Car Market

The American Economic Review ◽

10.1257/aer.104.11.3668 ◽

2014 ◽

Vol 104 (11) ◽

pp. 3668-3700 ◽

Cited By ~ 37

Author(s):

Alessandro Gavazza ◽

Alessandro Lizzeri ◽

Nikita Roketskiy

Keyword(s):

Quantitative Analysis ◽

Willingness To Pay ◽

Transaction Costs ◽

Consumer Surplus ◽

Welfare Effects ◽

Secondary Markets ◽

Car Market ◽

The Us ◽

Used Car ◽

Aggregate Effects

Quantitatively, we investigate the allocative and welfare effects of secondary markets for cars. An important source of gains from trade in these markets is the heterogeneity in the willingness to pay for higher-quality (newer) goods, but transaction costs are an impediment to instantaneous trade. Calibration of the model successfully matches several aggregate features of the US and French used-car markets. Counterfactual analyses show that transaction costs have a large effect on volume of trade, allocations, and the primary market. Aggregate effects on consumer surplus and welfare are relatively small, but the effect on lower-valuation households can be large. (JEL D23, L62, L81)

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Valuing Facebook

Behavioural Public Policy ◽

10.1017/bpp.2018.34 ◽

2019 ◽

Vol 4 (3) ◽

pp. 370-381 ◽

Cited By ~ 5

Author(s):

CASS R. SUNSTEIN

Keyword(s):

Social Media ◽

Willingness To Pay ◽

National Survey ◽

Well Being ◽

Welfare Effects ◽

Willingness To Accept ◽

Digital Goods ◽

Social Media Platforms

AbstractIn recent years, there has been a great deal of discussion of the welfare effects of digital goods, including social media. A national survey, designed to monetize the benefits of a variety of social media platforms (including Facebook, Twitter, YouTube and Instagram), found a massive disparity between willingness to pay (WTP) and willingness to accept (WTA). The sheer magnitude of this disparity reflects a ‘superendowment effect’. Social media may be Wasting Time Goods – goods on which people spend time, but for which they are not, on reflection, willing to pay much (if anything). It is also possible that in the context of the WTP question, people are giving protest answers, signaling their intense opposition to being asked to pay for something that they had formerly enjoyed for free. Their answers may be expressive, rather than reflective of actual welfare effects. At the same time, the WTA measure may also be expressive, a different form of protest, telling us little about the actual effects of social media on people's lives and experiences. It may greatly overstate those effects. In this context, there may well be a sharp disparity between conventional economic measures and actual effects on experienced well-being.

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Food labels: consumer’s information or consumer’s confusion

OCL ◽

10.1051/ocl/2018009 ◽

2018 ◽

Vol 25 (2) ◽

pp. D202 ◽

Cited By ~ 4

Author(s):

Sylvette Monier-Dilhan

Keyword(s):

Willingness To Pay ◽

Food Labels ◽

Topical Issue ◽

Food Sector ◽

National Brands ◽

Organic Products ◽

The Impact ◽

Published Research

This paper synthesizes findings of published research on the impact of food labels on consumers’ willingness to pay and focuses on the consumers’ rationales when deciding to purchase organic food. The first issue refers to one aspect of the proliferation of quality labels in the agro-food sector: the coexistence of two signs on one product and the consequences of this coexistence on the value of each sign. In the context of the competition between national brands and private labels through public quality labels, it has been shown that the willingness to pay for a quality sign decreases when it is combined with another one on the same product. The second concern is a two-fold issue: the characterization of “organics food consumers” in terms of socio-demographics characteristics and consumers’ purchasing motives. The more consistent result is that consumers with higher levels of education are more likely to purchase organic products. The three main reasons for buying organic products are considerations related to health, product quality, and environmental protection. The proliferation of signs about quality is a topical issue related to the emergence of sustainability issues that highlight labels linked to agro-ecological practices. The question of the effectiveness of the informational role of labels remains relevant.

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Third-party certification labels for organic food: consumers' purchase choice and willingness-to-pay

British Food Journal ◽

10.1108/bfj-07-2021-0777 ◽

2021 ◽

Vol ahead-of-print (ahead-of-print) ◽

Author(s):

Yong You Nie ◽

Austin Rong-Da Liang ◽

En Ci Wang

Keyword(s):

Willingness To Pay ◽

Product Information ◽

Organic Food ◽

Third Party ◽

Private Institutions ◽

Food Labels ◽

Content Type ◽

Non Profit ◽

Organic Certification ◽

Organic Rice

PurposeThe purpose of the present study is to examine the effect of organic food certification labels of different third-party verification institutions on consumers' choice of organic food in terms of willingness-to-pay (WTP) using cue utilization theory.Design/methodology/approachThe study conducted an experiment in which organic rice and organic certification labels were presented to 360 valid participants.FindingsWith different organic rice labels issued by various third-party verification institutions, including (1) foundations, (2) associations, (3) university certification centers and (4) private businesses, results indicate that consumers had different preferences and WTP for certain labels. The institutions preferred organic food labels issued by non-profit organizations. In addition, consumers showed different WTP as a result of different purchase motivations (e.g. health vs environmental protection).Originality/valueThese results imply that consumers might not have confidence in the organic labels issued by associations and private institutions. Therefore, different types of certification institutions can have significantly different impacts on consumers' WTP. The study further proposes that the extrinsic attributes of food products (i.e. the cues used in making a purchase decision) must be incongruent with the image of third-party certification institutions in order to develop more efficient communication of product information and to encourage consumers to give positive comments regarding organic food.

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Ethical food labels in consumer preferences

British Food Journal ◽

10.1108/bfj-10-2016-0515 ◽

2017 ◽

Vol 119 (8) ◽

pp. 1801-1814 ◽

Cited By ~ 13

Author(s):

Katharina Bissinger ◽

Daniel Leufkens

Keyword(s):

Willingness To Pay ◽

Consumer Behaviour ◽

Consumer Preferences ◽

Methodological Approach ◽

Price Premium ◽

Average Price ◽

Food Labels ◽

Data Set ◽

Content Type ◽

Ground Coffee

Purpose Since fairtrade labels are upcoming market instruments, the purpose of this paper is to identify and quantify consumers’ willingness to pay for fairtrade coffee products and tea. Thereby, this paper contributes to the discussion in favour of a non-private regulation of ethical food labels (FLs). Moreover, the paper provides information about the consumer behaviour of the German buying public. Design/methodology/approach The empirical analysis is based on homescan panel data of 13,000 representative German households, which includes actual purchase data of ground coffee, single-serve coffee, espresso, and tea for a five-year sample period from 2004 to 2008. As a methodological approach, the hedonic technique is used to model coffee and tea prices as a function of time, store, and product characteristics. Findings Regarding the variables of interest branding a product leads to an average price premium of 22.1 per cent, while the organic FL achieves an average price premium of 34.3 per cent. The highest average price premium of 43.1 per cent is ceteris paribus paid for fairtrade labels. In the case of fairtrade labels, tea products earn the highest implicit prices with 74.0 per cent, followed by ground coffee (54.9 per cent), espresso (24.7 per cent), and single-serve coffee (18.9 per cent). Originality/value The present analysis supplements the discussions around the willingness to pay for fairtrade certified products by the German buying public, a product differentiation between coffee products and the introduction of labelled tea. As the data set includes daily purchases, it allows analysis of consumer behaviour on a disaggregated level, given detailed information on prices, stores, origins, FLs, and so on.

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Consumer willingness to pay for organic fresh milk in Taiwan

China Agricultural Economic Review ◽

10.1108/caer-04-2012-0033 ◽

2014 ◽

Vol 6 (2) ◽

pp. 198-211 ◽

Cited By ~ 14

Author(s):

Chin-Huang Huang ◽

Chun-Hung Lee

Keyword(s):

Willingness To Pay ◽

Contingent Valuation ◽

Dairy Product ◽

Survival Function ◽

Organic Food ◽

Dichotomous Choice ◽

Food Labels ◽

Content Type ◽

Fresh Milk ◽

Starting Point

Purpose – The Fresh Milk Logo certifies that dairy product sold in Taiwan really is fresh milk. However, the logo represents only a moral pledge by the manufacturer. No method exists for inspecting whether products are fresh milk or reconstituted milk, and the label does not represent a commitment to the same level of quality and consumer health protection as found in organic foods. The purpose of this paper is to analyze consumer perceptions of organic certified agricultural standards (CAS) and estimates consumer willingness to pay (WTP) a premium should the Fresh Milk Logo be transformed into an organic CAS certified label. Design/methodology/approach – Exploratory factor analysis is adopted to extract the main determinants of respondent perceptions and preferences. Additionally, the double-bounded dichotomous choice of the contingent valuation method (CVM) and survival function is used to measure consumer WTP a premium for organic fresh milk. Findings – Consumer consumption preferences for buying fresh milk extracted four main factorial dimensions: Fresh Milk Logo, price/promotion, organic, and product/brand. Respondents are willing to pay US$21.95 extra per year to buy organic CAS milk and the factors affecting WTP are “Fresh Milk Logo” and “organic”. Research limitations/implications – The problems of the CVM include hypothetical and starting point for price bidding. The double-bounded dichotomous choice contingent valuation model and pre-testing can reduce the biases. The survival function is more flexible, yields more information and permits assumptions regarding parametric distributions without additional costs. The collaboration of survival function with the double-bounded method produces a reliable result that incorporates fewer statistical errors. Practical implications – Consumers are willing to pay a premium for fresh milk with an organic CAS label that certifies its good quality and safety. Social implications – Marketing managers can use the study findings to develop effective marketing strategies and refine advertising campaigns to promote organic fresh milk to attract more consumers. Originality/value – Organic food labels certify food safety, and are associated with the trend toward increasing awareness of environmental and health issues. Perception of organic food labels are introduced into double-bounded dichotomous choice CVM to estimate consumers’ WTP, an approach which has successfully dominated traditional methods, using Likert scale-type measurement.

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Consumer willingness to pay for redundant food labels

Food Policy ◽

10.1016/j.foodpol.2020.101938 ◽

2020 ◽

Vol 97 ◽

pp. 101938 ◽

Cited By ~ 1

Author(s):

Lacey Wilson ◽

Jayson L. Lusk

Keyword(s):

Willingness To Pay ◽

Food Labels

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Optimal Urban Plans

Environment and Planning A Economy and Space ◽

10.1068/a130575 ◽

1981 ◽

Vol 13 (5) ◽

pp. 575-580 ◽

Cited By ~ 4

Author(s):

P Gordon ◽

L Wingo

Keyword(s):

Willingness To Pay ◽

Welfare Effects ◽

Urban Structure ◽

External Effects ◽

Assignment Model ◽

Time Periods ◽

Actual Price ◽

Linear Assignment ◽

Over Time

This paper develops a model of optimal urban structure which combines data from hedonic regressions with a version of the assignment model. It is proposed that the data be updated in such a way that the model can be run over many time periods. The optimization is structured in such a way that external effects can be considered. The data for these are also obtained from the hedonic regressions. All of the methodology (hedonic regressions, demand estimations, linear assignment optimizations) is currently operational. The usefulness of the approach is further underscored by the ability to track welfare effects over space and over time; surplusses accruing to each renter and owner group (maximum willingness to pay less actual price paid) are computed from the dual of the optimization.

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