Consumer Preferences and Welfare Evaluation under Current Food Inspection Measures in China: Evidence from Real Experiment Choice of Rice Labels

Wenjing Nie,Taiping Li,Liqun Zhu,David Abler,Guanghua Lin

doi:10.3390/su10114003

Abstract

Frequent food quality and safety issues result in various food inspection measures in China, while some are not widely acknowledged by the public and are less efficient. Consumer demand is significant for priority setting in food policy. This study investigates Chinese consumers’ heterogeneous preferences for selected food inspection measures and estimates welfare effects based on willingness-to-pay (WTP) calculation. Rice consumption data from a 2018 nationwide consumer survey designed using the real choice experiment is analyzed by the random parameters logit and the latent class model. The findings reveal that consumers place a high value on government certification, and brand is valuable especially when public management is perceived as weak. However, the insufficient market demand for third-party certification may increase transaction costs due to overlapping functions and consumers’ distrust. Moreover, there should be a need to broaden consumers’ understanding of traceability and grading systems. This study emphasizes the necessity of direct governmental involvement and the existence of unnecessary policy cost.

Highlights

IntroductionWhen consumers with a greater willingness to pay (WTP) for high quality food do not correctly identify high quality food products, producers may not have an incentive to improve food quality or update their production technology [1,2]
Asymmetric information impairs the market for food products
Considering that consumer preferences may not be optimal from a public health perspective, this study provides a welfare analysis of the effectiveness of selected food inspection measure for a better understanding of economically viable food policy

Summary

Introduction

When consumers with a greater willingness to pay (WTP) for high quality food do not correctly identify high quality food products, producers may not have an incentive to improve food quality or update their production technology [1,2]. This is an example of Gresham’s law, which states that bad money drives out good [3]. The Chinese government instituted a series of food inspection measures including traceability system, quality grading and quality certification. Since consumers are the main beneficiaries of enhanced food management systems, what consumers prefer in a demand-oriented market may drive the focus of public policy-making and the food suppliers’ operating decisions

Objectives

Results

Conclusion