Progress 02/20/14 to 06/30/16
Outputs
Target Audience:The target audiences reached during this period were: (i) academic participants in international economics conferences, more precisely the American Economic Association's (ASSA) Annual Meeting, San Francisco, CA, Jan 3-5, the Western Agricultural Economics Association Annual Meeting (Victoria, BC, June 21-24, 2016) and the Pacific Northwest Regional Economics Conference (Vancouver, WA, May 11-13, 2016). (ii) policy makers and interest groups, more precisely those represented at the Pacific Northwest Regional Economics Conference (Vancouver, WA, May 11-13, 2016). (iii) economics students at University of Wyoming in the following classes: Intermediate microeconomics, 3020, spring 2016, and Public economics, 4520, fall 2016. The project provided a unique opportunity for students to learn about economic experimental methods to extract market value and information preferences for premium products (in our case: locally produced honey). Data for the project was collected via laboratory experiments, of which a large number of subjects were recruited in Laramie, Wyoming. Many students participated as subjects in these experimental sessions. The instructor (also the PI of this project) could thereafter inform students of both the results of the collected data, and discuss methods and results in class, all as an integral part of the course material for these classes. (iv) agricultural economists at University of Wyoming, via the defense of the Master's thesis in agricultural economics that was generated from the project. Finally, the target audience we have yet to reach are practitioners (bee farmers and other agentson the supply side ofthe honey market). Data collection was more time consuming than anticipated, hence we did not get the opportunity yet to participate in events targeted at farmers. We plan on presenting results tobee farmersin the coming year. Changes/Problems:We had planned to run only one experiment, with many sessions on, or close to, Agricultural Experiment Station Research & Extension Centers around the state of Wyoming. We started off by running experimental sessions in Torrington and Laramie to extract Wyoming consumers' value for local versus conventional honey, as well as examine how their values were affected by health knowledge on honey and their demand for honey origin information. Our results turned out to be very stable (over a large number of subjects in Torrington and Laramie), meaning that we benefited from tweaking the design of the experiment to extract more information about demand for Wyoming honey, and demand for information about the same. More precisely, we set out to measure an entire demand curve for Wyoming honey, which involved an experimental auction, added more complexity to information demand and asked about more consumer characteristics and preferences. Thereby we could add even more value to the project. However, to extract more detailed information (primarily due to the experimental auction we used to derive the demand curve), we needed to run the additional experiment in a more controlled environment, i.e. in an economic laboratory. We were therefore geographically restricted to Laramie (the laboratory in the College of Business, University of Wyoming). Further, we had the benefit of strengthening our results by recruiting more subjects than originally planned - a participation fee of $35 (instead of $55) turned out to be enough to recruit a large number from the general public. In sum, the changes we made were that (i) we ran two different experiments, instead of just one, (ii) increased subject participation in the experiment(s), and (iii) recruited a larger share of subjects in the town of Laramie, than originally planned, as opposed to in two other towns around Wyoming. What opportunities for training and professional development has the project provided?Jenny Beiermann (Master's student) was trained in the methodology of laboratory economic experiments and how to extract consumer willingness to pay for product characteristics, which ultimately resulted in her thesis. The project also provided a unique opportunity to train undergraduate students on the same topics, as well as to tie it to public policy, since the PI of this project also teaches Intermediate microeconomics and Public economics. Many students from the College of Business at University of Wyoming (as well as students from mentioned classes) participated in the experiments. Many of the students therefore both got to see how a laboratory experiment was conducted and then discuss its implications and design in class. How have the results been disseminated to communities of interest?Results have primarily been communicated to researchers, policymakers and interest groups via presentations at international conferences. Results will also be communicated to agents on the supply side of honey (farmers and other agents) in the coming year - we will primarily target events by the Wyoming Beekeepers Association. What do you plan to do during the next reporting period to accomplish the goals?
Nothing Reported
Impacts
What was accomplished under these goals?
Impact statement An increasing concern for domestic agriculture is the Colony Collapse Disorder which is killing off domestic honey, thereby drastically reducing domestic honey production. As a result, supply on the domestic honey market increasingly consists of foreign honey, which runs the risk of being adulterated (i.e. higher in pesticides and antibiotics), which may pose risks to consumer health and cause consumers ethical concerns. The knowledge generated in this project provides important information on Wyoming consumer willingness to pay for Wyoming honey, free from adulteration, and how this premium depends on consumers' health and ethical concerns about honey. The project therefore provides Wyoming honey producers with information on how to increase their market share, via communication to consumers. Our project group conducted two different, large scale, economic laboratory experiments, entailing almost 1000 participants, to examine consumer willingness to pay for Wyoming produced honey, and the factors that impact their willingness to pay. Participants were recruited in Torrington and Laramie, Wyoming. We find that most Wyoming consumers are motivated to buy Wyoming produced honey, even when it comes at a significantly higher price, compared to honey of unknown origin. The first experiment showed that when offered an 8 ounce jar of Wyoming honey at a price premium of 2.48 dollars, as many as 53 percent of consumers choose to pay the premium to get the Wyoming honey, instead of getting an equal size honey jar of unknown origin. Our second experiment provides more detail on how the willingness to pay for Wyoming honey ranges over consumers. It shows that the premium consumers are willing to pay for Wyoming produced honey (again for an 8 ounce jar), compared to for an equal size jar of honey of unknown origin, ranges from 0-10, with a mean value of 2.08 dollars (standard deviation: 2.26). In sum, our results clearly imply that Wyoming consumers are willing to pay a significant premium for Wyoming produced honey. We found that Wyoming producers strongly benefit from labeling honey with origin information, and that communicating information on the health benefits of Wyoming produced honey (over honey of unknown origin) significantly increases consumer demand for Wyoming produced honey. Our results therefore show that there may be significant monetary incentives for Wyoming honey producers to supply honey, thus undertake efforts to strengthen supply of domestic/locally produced honey, in the wake of the Colony Collapse Disorder. Goal achievement In this project, we aimed to analyze how consumers evaluate health and ethical risks of consuming adulterated honey (by which we mean honey that may entirely or partly contain foreign produced honey, thereby running the risk of being high in pesticides and antibiotics) and how these risks impact consumer willingness to pay for Wyoming honey. Our focus was on Wyoming consumers. Our objective was to answer the questions in bullet points below. Are consumers willing to pay a premium for Wyoming honey? (At the same time, this addresses our second question: Are consumers willing to pay a premium to ensure the honey they consume is not adulterated?) To answer this question, we designed and collected data from two large scale economic laboratory experiments, performed in Torrington and Laramie, Wyoming. We recruited participants from the general public to participate in experimental sessions that lasted for around 30 minutes. In these experiments, participants were offered the opportunity to use real money to buy Wyoming produced honey. The first experiment consisted of eight different treatments (varying the availability of health and origin information of the honey), and the second experiment consisted of nine different treatments (varying the market context of honey, in terms of information availability and reminders of opportunity costs). Both experiments provided strong support for the idea that Wyoming consumers are willing to pay a premium for Wyoming honey, and that it is important that the honey is not adulterated. More precisely, as stated above, the first experiment showed that 53 percent of consumers were willing to pay a price premium of 2.48 dollars for an eight ounce jar of Wyoming honey, compared to an equal size honey jar of unknown origin. Our second experiment was designed to provide more detail into the premium consumers are willing to pay for Wyoming produced honey. We found that on average, Wyoming consumers are willing to pay a price premium of 2.08 dollars (standard deviation: 2.26) for an 8 ounce jar of Wyoming produced honey, compared to for an equal size jar of honey of unknown origin. We found that consumer characteristics matter for willingness to pay for Wyoming honey. In the first experiment, we found (weak) evidence that women are 14 percent more likely to buy Wyoming honey, compared to men. However, our second experiment did not confirm this gender effect. We found some evidence that consumers with high income, and consumers who assign great importance to their purchases being locally produced, are willing to pay more for Wyoming honey. Our results therefore imply that communication that enhances consumer concerns for locally produced food would also enhance the willingness to pay for Wyoming produced honey. Further, results from our second experiment show that market context matters to the premium consumers willing to pay for Wyoming honey. We find that the market context that is most conducive to average spending on Wyoming produced honey is a market characterized by (a) readily available origin information on honey, and (b) no consumer opportunity cost reminders of their honey purchase, i.e., consumers (and particularly those consumers who generally spend the least - "tightwads") spend more on Wyoming honey if it is visibly labeled with an origin label and if they are not specifically reminded that the money they spend on honey could be used for other purchases. Are consumers concerned about the health and ethical aspects of adulterated honey? We found that consumers are concerned primarily with their own health, such that when Wyoming honey is communicated as healthier than honey of unknown origin, willingness to pay for Wyoming honey significantly increases. By informing consumers of the health impact of Wyoming honey, the share of consumers willing to pay a premium of 2.48 dollars for Wyoming honey increased from 49 to 59 percent in our experiment. Wyoming honey producers would therefore benefit from communicating health benefits to consumers. Further, Wyoming consumers believe that they benefit from knowing the origin - 80 percent of honey consumers in our experiment chose to learn origin information and pay a higher price for Wyoming honey, instead of choosing to be ignorant of origin and thereby allowing themselves to pay less for honey. We also find that consumers typically would like to know what distinguishes Wyoming produced honey from honey of unknown origin (around 90 percent of participants in our second experiment prefer to be informed). These results imply that both consumers and producers benefit from product labels that signal the origin of honey, as well as information that explains the health difference between local honey and honey of unknown origin. Our results also show that consumer demand for origin information of honey depends on their knowledge of health properties of honey. If consumers are informed about differences in pesticides and antibiotics between local honey and honey of unknown origin, the share of consumers who want to know the origin of honey significantly increases from 77 to 84 percent. Our results therefore imply that Wyoming honey consumers are concerned about their own health, and that if they know that the origin of honey may impact their health, they are also more concerned with the origin of honey.
Publications
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