Does information on equivalence of standards direct choice? Evidence for organic labels from different countries-of-origin. (April 2018) - Yeh, Ching-Hua
Highlights: Hierarchical Bayesian estimation is used to increase the estimation accuracy in MXL. Chemical residue testing information is valued higher than organic labeling. Information on EqualOrganic increases skepticism towards organic pepper from China. EqualOrganic increases consumers' utility for organic pepper from Taiwan and Japan. Combining DCE and PSM can help to reduce potential selection biases in the results. Abstract: We examine whether an equality of organic standards (EqualOrganic) information treatment impacts Taiwanese consumers' food preference and purchasing behavior. EqualOrganic implies that regardless of products' country-of-origin (COO), organic certifications are based on the same production regulation and managerial processes. We apply discrete choice experiments combined with a propensity score matching approach that ensures structural sample balance between EqualOrganic-treated and non-treated consumers. The analysis is based on fresh sweet pepper purchase decisions of 800 Taiwanese consumers. Results indicate that participants' product choice was sensitive to EqualOrganic information treatment, though different than expected. Information on the equality of organic standards significantly further increased the purchase likelihood for Taiwan-origin organic products, while the opposite effect is detected for Chinese organic products. In addition, we observe an increase in the utility of the opt-out option in the information treatment group. Provision of information thus failed to assure consumers about the equality of organic standards. Instead there is some indication that it eased accessibility of pre-existing doubts about the reliability and trustworthiness of products originating from China. We discuss these findings from a policy and marketing perspective.