Improving nutrient content through genetic modification: Evidence from experimental auctions on consumer acceptance and willingness to pay for intragenic foods

Gregory Colson

ISU General Staff Papers from Iowa State University, Department of Economics

Abstract: After more than a decade of experience in the global marketplace, genetically modified (GM) foods continue to be controversial. Early GM traits were obtained by transferring genes across species, largely from soil bacteria, and this transgenic nature is one dimension of consumer resistance. Recently, breakthroughs have occurred using intragenic bioengineering where genes are moved long distances within specie and without antibiotic markers. These new intragenic bioengineering methods offer the potential for new commercial crop varieties with traits of direct value to consumers (e.g., enhanced nutrition) without reliance on outside foreign genetic material.To assess the potential market for new intragenic foods, a series of multiple-round random nth-price experimental auctions were conducted in the spring of 2007 on randomly chosen adult consumers with randomized food label and information treatments. Using the data collected through the experimental auctions, this dissertation assesses several issues including: (1) consumers' willingness to pay (WTP) for GM food products with and without enhanced antioxidant and vitamin C levels, (2) the impact of controversial and verifiable information on consumers' WTP, (3) the public good value of verifiable information about GM, (4) the welfare impact of alternative labeling policies for GM foods, and (5) the impact of outside-the-auction consumer held product inventories on bids in food experiments.Results indicate that consumers are willing to pay significantly more for intragenic GM vegetables with enhanced nutrition than for a conventional product. This suggests that there is potential for new intragenic foods to find acceptance among consumers and that the food industry for the first time potentially has an incentive to voluntarily label GM foods as GM. The consumer welfare gains from labeling policies that differentiate intragenic and transgenic are quantified. However, the information available to consumers when making product purchase decisions is shown to have a significant impact on private valuations, thus potentially eroding demand for intragenic foods. Verifiable information from independent third-party organizations is shown to have value to consumers through enabling more informed product choices.

Date: 2009-01-01
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