De Gustibus Non Est Disputandum revisited: The influence of social networks and health status on preferences for functional food

Abstract

Combining the new consumer theory of Becker with a network model of belief formation developed in sociology we derive a theory of peer group influence on households' consumer beliefs regarding the impact of health related attributes on households utility and hence on households' willingness to pay for functional food. In particular, our theory implies peer group effects on households' preferences for functional food, while following the famous De-Gustibus-Non-Est-Disputandum paradigm of Bekcer and Stigler our theory implies no peer group effects on households z-good preferences, e.g. WTP for health, taste or convenience as nutrition related z-goods. Using own unique social and medical survey data of 2000 probands, the KIK-panel (Kieler- Interventions-Kohorte), collected within the Focus-project in Germany during the years 2012 and 2013 we test our theory applying a two-stage latent class estimation of macro and micro food preferences. In particular, the approach allows a statistical testing of the impact of peer group network effects on consumer beliefs, preferences and nutrition behavior. Central results are (i) estimation confirming our theory implying significant peer group effects on consumer beliefs and implied WTP for functional food attributes; (ii) however, we also found significant peer group effects on z-good preferences which contradicts the De-Gustibus-Non-Est-Disputandum paradigm. (iii) accordingly we offer a modified new consumer theory allowing for peer group effects on z-good preferences. At a practical level, our results have interesting implications for specific marketing strategies promoting demand for functional food as well as for specific political communication strategies preventing nutrition based morbidities and thus promoting public health.