4809: Organic products – a matter of public or private values?

Millock, Katrin; Wier, Mette and Andersen, Laura Mørch (2005) Organic products – a matter of public or private values?. Enviromental and resource economics.

Summary

In this paper, we use a unique combination of questionnaire data and real market purchase data on organic food to examine whether stated values can predict purchase behaviour. We are particularly concerned about revealing to which extent organic goods represent private or public benefits, because this has important implications for the need for public intervention. Our data cover around 2000 households during 1997-2001 and it is combined with a survey administered on the same panel in 2001. We distinguish between private use values (health, taste and freshness attributes) and public non-use values (environmental and animal welfare attributes). We find that public values are on average valued much more than private values according to consumers’ own statements. However, when confronting these consumer statements with actual market behaviour, it becomes evident that the propensity to purchase organic increases significantly with the weight assigned to private values. We test this empirically by estimating simple logit and multinomial logit models of consumer choice dependent on stated values and individual characteristics. Stated private values increase the probability of being an organic user to a significant extent. The effect of stated public values is lower, and not always significant depending on food product group. In contrast, stated willingness to pay extra taxes to subsidize organic farming, appears to mainly reflect public values. Whether we consider stated willingness to pay extra taxes to finance a subsidy for organic farming or observed willingness to pay for organic products on the real market, the majority of consumers are only willing to pay if they hold both types of value.

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