Stated and Revealed Preferences for Organic and Cloned Milk: Combining Choice Experiment and Scanner Data

Abstract

The U.S. Food and Drug Administration's recent announcement that milk from cloned cows is as safe to drink as that from conventionally bred cows prompted interest among farmers, food retailers, and regulators in the market impacts of the introduction of milk from clones. Because milk from cloned animals is not currently labeled in the market, we utilized a stated preference experiment to determine consumer preferences for the attribute, but also sought to determine whether the survey‐based choices were consistent with people's revealed preferences given by scanner data. Our analysis indicates that a pooled model combining stated and revealed preference data exhibits overall better out‐of‐sample prediction performance than either data set used alone. Results from the pooled model indicate that consumers are willing to pay large premiums to avoid milk from cloned cows—an amount that is over three times that for organic or rBST‐free milk. The results are used to calculate the value of a mandatory labeling program.