International Choice Modelling Conference, International Choice Modelling Conference 2011

The effects of risk presentations and risk reduction methods on WTP estimates

Seda Erdem, Dan Rigby

Last modified: 27 June 2011

Abstract


This paper presents findings on two research questions. First we examine the effects of different risk presentations, and specifically the impact of visual aids, on the valuation of health risk reductions. This is achieved via a split sample DCE survey in which the sets in both treatments uses absolute risks while the second treatment add “risk grids”. The second part of the study investigates how WTP for reductions in the level of foodborne health risks are affected by the means by which the risk reduction is delivered. We use a split sample approach to compare 2 means of achieving risk reductions: nanotechnology versus increased regulation and inspection. Heteroscedastic mixed logit models accommodating scale effects are used to investigate both issues. The analysis results show that the use of risk grids in choice tasks does not have any effect on the choices of consumers’ status quo option, the level of animal welfare, and the price of the product, but on the level of food safety and scales of subsamples (i.e. grid and non-grid). An overall comparison of the WTP estimates shows that consumers who normally buy standard chicken, on average, are willing to pay more to prevent food poisoning risks when risks are conveyed via grids. Here, grids may be facilitating the understanding of risks and reductions in the level of risks when presented in choice tasks. Results also show that the presence of nanosensors in packaging does not have any effect on consumers’ preferences for raw whole chickens. However, the values of health risk reductions achieved by nanosensors and by general means differ for different types of consumers.


Full Text: PDF