Preferences and willingness to pay for GM labeling policies

Abstract

The use of genetically modified organisms in agriculture is currently the focus of intense public and political debate. Press articles provide evidence that US consumer concerns toward biotechnology are increasing. In this paper, we analyze whether consumers prefer mandatory or voluntary labeling schemes through contingent valuation. Additionally, we calculate the premium that consumers are willing to pay in order to subsidize their favorite labeling alternative. We find that the premium associated with mandatory labeling is lower than expected costs. This indicates that in spite of the concerns surrounding biotechnology, consumers remain fairly confident with the current Food and Drug Administration policy, which does not require mandatory labeling.