What to Choose? The Value of Label Claims to Produce Consumers

Craig A. Bond, Dawn Thilmany and Jennifer Keeling Bond

No 9704, 2007 Annual Meeting, July 29-August 1, 2007, Portland, Oregon from American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association)

Abstract: This paper addresses three key empirical questions related to health, nutrient, and process claims on front-label packaging; namely, 1) How do consumers value alternative claims on product and process-based attributes for fresh produce; 2) Are these values additively separable; and 3) To what degree is there heterogeneity between consumers on these values? We use a hypothetical choice experiment on red leaf lettuce attribute bundles, and estimate several logit models (MNL and ML) that provide estimates of marginal utilities (and with the inclusion of varying prices, marginal values) of various attributes related to general health claims, specific nutrition and health claims, certification logos related to health and nutrition currently found in the marketplace, as well as certified organic claims (relative to the conventional reference group). The results showed that consumers do distinguish between competing claims and logos, though the impacts are not always as expected, likely due to the information set used at the time of the choice. We found some evidence of attribute bundling between the health claims and the familiar Five-a-day program logo, and between organic production and a claim regarding vitamin C content. Finally, we found that use of the unconditional distributions (relative to the conditional)in a ML model overstates the degree of preference heterogeneity across the sample and overstates the magnitude of the marginal effects of the random parameters. This may create misleading impressions regarding the existence and size of specialized niche markets, the response of consumers to varying health, nutrition, or process claims, and/or the response of consumers to the introduction of new products with these (or similar) claims.

Keywords: Consumer/Household Economics; Demand and Price Analysis (search for similar items in EconPapers)
Pages: 37
Date: 2007
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea07:9704

DOI: 10.22004/ag.econ.9704

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