Consumer's Willingness to Pay for Organic Food in the Perspective of Meta-Analysis

Abstract

With the concern for the market of food safety, abundant researches on consumer's WTP for organic food have been carried out. This paper aims to validate the conclusion from the research review that the estimates of consumer's WTP for organic food from various researches are statistically significant and attempts to explore the causes, which are accounted for in terms of four factors: sampling err, socio-economic characteristics of sample, research methods and research objects. A wide range of WTPs were reported, among which the maximum value shoots up to 509.2% and the minimum value touches down to 2.3%. The main attributing factors to the variation among estimates are identified as sampling err, socio-economic characteristics of samples and valuation method. It's implied that the sample size of empirical survey should be at least above 200, while open-ended question format, household randomly sampling method and personal interview survey are much more appreciated. In Lusk et al. (2004)'s meta-analysis on consumer's willingness to pay for non-GM foods, the range of estimates is remarkable, from - 67% to 784%. If the significant variance among the estimates of consumer's WTP for non-GM food might be due to uncertainty of potential hazard of food gene modification, the valuation results of consumer's WTP for organic food, popularly accepted as safer, healthier, are expected much more coordinated. Nevertheless, it is found that estimates of consumer's average willingness to pay rage from 3% to 509% among diverse studies. Hence, there is a growing need to evaluate the current research outcomes and to explore what causes the variation in the estimates. There are three primary reasons why understanding the sources of the outcome variation would be useful and important. The most obvious is that if variation comes from various research methods, researchers could estimate the causes of bias, as well as improve the methods in eliciting consumer's willingness to pay to minimize biases caused by sampling and survey methods. In addition, a much more comprehensive understanding of the demand theory concerning food safety would be gained when a more reliable exploration between WTP and socio-economic variables is carried out. Decision-makers could make better use of the valuation outcomes of consumer's willingness to pay as well when they are well acknowledged of potential sources of bias. The purposes of this research are three-folded. Firstly, it provides a comprehensive review of major research findings in the field of consumer's willingness-to-pay for organic food throughout the world and summarizes current explanations for the variation of WTP estimates in the aspects both of individual socio-economic characteristics and research methods. Secondly, with meta-analysis, this paper attempts to validate the conclusion from the research review that the estimates from different researches are statistically significant. Third, this paper attempts to shed light on what causes the difference in the estimates of consumer's WTP for organic food from different researches, in terms of four aspects: sampling err, socio-economic characteristics of sample, research methods and research objects.