What factors make consumers in the USA buy hemp products? Evidence from Nielsen consumer panel data

Abstract

This study aims to identify critical consumer-demographic characteristics associated with the consumption of products containing hemp and investigate their effect on total expenditure in the USA. To estimate the likelihood of market participation and consumption level, the Heckman selection model is employed utilizing Nielsen consumer panel data from 2008 to 2015. Using a Heckman selection model, this study finds that socio-demographic characteristics, especially income, age, and education, play an important role in explaining purchases of and demand for different categories of hemp products. Noteworthy is the finding that the role of the age of the household head is mixed with respect to consumption decisions and consumption level across the products. In most cases, higher education and income households are more likely to buy hemp products, and those are associated with significantly higher consumption levels. The hemp products used in this study are made of hemp seeds, and our findings show that the hemp seed market could be segmented based on the forms. Results provide a basic understanding of a consumer profile and overall hemp market that has had double-digit growth over the last six years. As the industry continues to move forward, policymakers will need a deeper understanding of the factors driving the industry to create regulations supporting the development of the hemp industry.