International Choice Modelling Conference, International Choice Modelling Conference 2017

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Do Consumers in the UK and Spain Perceive the Attributes Greenhouse emissions, Type of Production, Origin, and Fat Content as Substitutes or Complements
Faical Akaichi

Last modified: 28 March 2017

Abstract


Labelling food products as healthy or/and ethical has been found to be an effective strategy to differentiate them from conventional products and increase their consumption. A massive research effort has been devoted to understand consumer preferences for ethical and health-related attributes as key to production and marketing success of food products (Akaichi et al., 2016; Gerini et al., 2016; Aprile et al., 2016; Provencher and Jacob, 2016). Despite the growing interest for these attributes, a major question that remains minimally addressed is whether consumers treat these food attributes as related and, if so, whether they consider them as substitutes or complements.

 

Assessing the tradeoffs that consumers may make when they are presented with conflicting attributes is important because firms engaged in product differentiation are not only interested in identifying the attributes that are attractive to consumers, but also in carefully evaluating whether there is any potential conflict between the chosen attributes. This study attempts to fill this gap by examining the interactions between four popular meat attributes (i.e. Greenhouse gas (GHG) emissions from production, type of production (organic/not organic), origin of the product and fat content). Since the data was collected using a choice experiment conducted in UK and Spain, this study also contributes to the literature by assessing the similarities and differences between British and Spanish consumers’ preferences and willingness to pay (WTP).

 

Several studies on consumers’ choices showed that the reliability of results obtained from data collected using choice experiments could be improved if the effects of factors such as “attribute non-attendance (ANA)” (Challak et al., 2016), “free riding and altruism (FRA)” (Lusk et al., 2007)”, and “reported choice certainty (RCU)” (Beck et al., 2016) are controlled for. Therefore, in addition to assessing consumer’ preferences and WTP for different food attributes as well as the two-way interactions between these attributes, this study stands out from previous studies on the same topic by collecting information on and analysing the effect of ANA, FRA an RCC on consumers’ preferences and WTP.

The data were collected through a national, Web-based survey conducted in UK and Spain. The final version of the survey was administered by a third party contractor using their consumer panel, during June and July 2016. A total of 1,211 and 1,206 primary grocery shopper panellists in the UK and Spain, respectively, completed the surveys. In both countries, the sample was required to be representative of the population in terms of Gender, Age, employment status and geographical area of the country.

In each country, respondents were presented with a series of choice sets each including four hypothetical beef mince alternatives described in terms of five attributes which included level of GHG emissions (i.e., Low, Moderate, High), Type of production (i.e., Organic/Not organic), Origin (i.e., Local, National, Imported), Fat content (i.e., Low, Moderate, High), and Price (i.e., £1.50/£3.00/£4.50/£6.00 for the UK survey and 2.30€/3.10€/3.90€/4.70€ for the survey conducted in Spain).

Ngene Software was used to generate a Bayesian D-optimal design. The Db-opimal design was obtained after 25,000 iterations with 500 Halton draws per iteration, achieving a Db-error of 0.11 and 0.15 for the design of the choice experiments conducted in the UK and Spain, respectively. To make the choice task cognitively easier for respondents, the design was blocked in four blocks (i.e., 9 choice sets per respondent). In the choice task, respondents were successively shown 9 different choice sets and were repeatedly asked to choose the alternative they prefer most.

To reduce the problem of hypothetical bias, we followed the approach used by Ladenburg, and Olsen (2014). This approach consists in including a classic cheap talk script (Commings and Taylor, 1999) right before the choice task. Then the cheap talk script is augmented with a repeated opt-out reminder showed to participants before each choice set. Furthermore, to collect information on attributes non-attendance, response choice certainty, and free riding and altruism we followed the approaches Challak et al. (2016), Beck et al. (2016), and Lusk et al. (2007).

As for the analysis of the collected data, we started by estimating a random parameter logit (RPL) in both preference and WTP space. The next step in the data analysis is to estimate a hybrid choice model (HCM). HCM allows the user to improve the explanatory power of the choice model by considering the effect of respondents’ latent attitudes and perceptions. Furthermore, the HCM will be modified to account for the effect of attribute non-attendance, free riding and altruism, and reported choice certainty.

The preliminary results from the estimation of the RPL in preference space showed that British and Spanish respondents’ preferences and WTP for the five attribute are quite similar. For instance, respondents in both countries were found to be willing to pay a price premium for the four attributes in the following decreasing order: beef mince with low fat content, local beef mince, organic beef mince, and beef mince with low GHG emissions from production. Interestingly, respondents’ preferences and WTP for different bundles of the attributes considered in this study were found to be significantly different. For example, consumers in Spain were found to be willing to pay an additional premium for organic beef mince labelled as local. Nonetheless, British consumers were found to perceive these two attributes as independent. Similar results were found for the bundles local-low GHG emissions and local-low fat content. More interestingly, the attributes organic and low fat content were perceived as overlapping (or substitutes) by British respondents and as complements by Spanish respondents. These results show the importance of the estimation of the two-way interactions between the different attributes considered in a choice experiment. It allows the investigator to assess the tradeoffs faced by consumers when choosing food products with multiple (sometimes conflicting) attributes as well as correctly computing consumers’ total WTP for a specific product.

Furthermore, the preliminary results showed that many of the estimated standard deviations are statistically significant suggesting that the estimated preferences and WTP were highly heterogeneous among the sampled consumers. To explain the heterogeneity of respondents’ preferences and WTP, a HCM will be estimated considering not only information on respondents’ socio-demographic characteristics but also latent variables that will be obtained using the extensive information on consumers’ attitudes and perception that was jointly collected along with information on respondents’ choices. The final results from the estimation of the HCM as well as the results on the effect of attribute non-attendance, free riding and altruism, and the reported choice certainty on consumers’ preferences and WTP will be certainly included in the final version of the paper that will be submitted if the abstract get accepted.

References

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Akaichi, F., Nayga, R. M., & Nalley, L. L. (2016). Are there trade-offs in valuation with respect to greenhouse gas emissions, origin and food miles attributes? European Review of Agricultural Economics.

Aprile, M. C., Caputo, V., & Nayga Jr, R. M. (2016). Consumers’ Preferences and Attitudes Toward Local Food Products. Journal of Food Products Marketing22(1), 19-42.

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Ladenburg, J., & Olsen, S. B. (2014). Augmenting short cheap talk scripts with a repeated opt-out reminder in choice experiment surveys. Resource and Energy Economics, 37, 39-63.

Lusk, J. L., Nilsson, T., & Foster, K. (2007). Public preferences and private choices: Effect of altruism and free riding on demand for environmentally certified pork. Environmental and Resource Economics, 36(4), 499-521.

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Provencher, V., & Jacob, R. (2016). Impact of Perceived Healthiness of Food on Food Choices and Intake. Current obesity reports, 5(1), 65-71.

Train, K., & Weeks, M. (2005). Discrete choice models in preference space and willingness-to-pay space (pp. 1-16). Springer Netherlands


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