Progress 01/01/05 to 12/31/05
Outputs
In this research project, we developed and estimated an integrated discrete choice model system of product choice and consumer subjective knowledge about nutrition (including perceptions of and attitudes toward nutrition) for prepared frozen meals, salted snacks, and cereals in the US market in the period from 1995 to 1999. The model linked observable and latent consumer characteristics (e.g., income, taste, attitudes toward and awareness of nutrition) to observable and latent product characteristics (e.g., prices, nutritional attributes and consumer subjective perceptions of these attributes, quality) and allowed us to obtain consumer preference parameters and demand elasticities with regard to product attributes. Investigating the food product choice process within the framework of consumer subjective and latent characteristics allowed us to evaluate the importance of behavioral factors in consumer decision-making. In our modeling, we adopted a non-standard economic
assumption that consumer preferences were endogenous to the demand system. We estimated a joint probability function of a product choice model and a latent variable model of consumer subjective knowledge using a simulated maximum likelihood estimator. To estimate the model, we needed data for the following variables: market shares and prices of prepared frozen meal, salted snack, and cereal products; their product characteristics, advertising and promotion; and information on the distribution of consumer observable and latent characteristics. We obtained the data on market shares, prices, and in-store marketing efforts for prepared frozen meal, salted snack, and cereal products from the IRI Infoscan Data Base at the Food Markets Branch, Economic Research Service, U.S. Department of Agriculture. We matched the Infoscan quarterly market share, price, and other data for each product with three other data sources, the Leading National Advertising data-base, the Nutritional Content and
Labeling Data developed at the University of Massachusetts, and the Diet and Health Knowledge Survey (DHKS). The analysis of consumer preference parameters for the nutritional attributes of prepared frozen meals, salted snacks, and cereals revealed that consumers value only a very few nutritional characteristics of these products. Calories, fat, and sodium were valued positively. Our findings with regard to the positive valuation of calories, fat, and sodium could be linked to strong consumer preferences for taste as opposed to nutrition and health-related attributes. The estimated parameters of the demand system showed that product prices and advertising play a much greater role in consumer choices of prepared frozen meals, salted snacks, and cereals than do nutritional characteristics. However, consumer subjective knowledge of nutrition (perceptions of fat and attitudes toward fat and sodium) also appeared to have a significant impact on consumer choices. Thus consumers who had more
favorable attitudes and more accurate perceptions of nutrition valued fat and sodium negatively and purchased products with lower amounts of fat and sodium.
Impacts
This research focused on the important determinants of consumer demand for food products and how they have been changing over the last decade. Understanding these factors is key information for assessing the competitiveness of U.S. agricultural producers and food processors as they choose product designs and marketing strategies; for understanding the benefits and costs of government regulations, such as labeling, intended to influence consumer food choice and, ultimately, public health; and for evaluating the impact of changing consumer demand for food on the agricultural and food sectors of the U.S. economy. Completing this project, gave us the opportunity to share the results of our work with other scholars in the field in a series of conference presentations and papers submitted to various journals for publication. These include: Mojduszka, Eliza M. and Kristen Fantuzzi. 2006. Variety Seeking and Habit Formation in Consumer Purchases of Salted Snacks. Journal of
Applied Econometrics. Mojduszka, Eliza M., Rachel M. Everett, and Kristen Fantuzzi. 2006. Determinants of Consumer Food Choices Over Time. American Journal of Agricultural Economics. Mojduszka, Eliza M. and Mark Whitehead. 2006. Welfare Effects of Product Entry and Exit in the Cereal Industry. Journal of Industrial Economics. Mojduszka, Eliza M. 2005. Accounting for Consumer Perceptions and Attitudes in Discrete Choice Demand Models. Journal of Applied Econometrics.
Publications
- No publications reported this period
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Progress 11/15/02 to 11/14/05
Outputs
The principal investigator left the university in December 2006.
Impacts
This research focused on the important determinants of consumer demand for food products and how they have been changing over the last decade. Understanding these factors is key information for assessing the competitiveness of U.S. agricultural producers and food processors as they choose product designs and marketing strategies; for understanding the benefits and costs of government regulations, such as labeling, intended to influence consumer food choice and, ultimately, public health; and for evaluating the impact of changing consumer demand for food on the agricultural and food sectors of the U.S. economy.
Publications
- No publications reported this period
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Progress 01/01/04 to 12/31/04
Outputs
During the last calendar year, we have successfully completed the data phase of our research work. We have compiled one comprehensive data set that consists of all the data information necessary to complete the project. We have also started the estimation phase of our work that we expect to complete by 04/30/2005. Producing this very comprehensive analysis for our project requires the development and integration of multiple data sources that provide information relevant to the determinants of consumer food choice. These include IRI Info-scanTM Data for quantities, prices, and in-store promotion levels; Nutritional Quality Change Data at the University of Massachusetts and the USDA National Nutrient Database for nutrient content information; National Leading Advertisers Data for advertising expenditures; and USDA Diet and Health Knowledge Survey Data and Consumer Demographics Data for consumer characteristics. We obtained data on market shares, prices, brand offerings,
and in-store marketing efforts for all the products in selected food categories from the IRI Info-scan database. We matched the IRI Info-scan quarterly market shares, prices, and other data for each product with five other data sources. First, we matched it to the nutrition composition data included in the Nutritional Quality Change Data developed at the University of Massachusetts and to the USDA National Nutrient Database available at the USDA web site. The IRI Info-scan data do not provide information on the amounts of nutrients contained in food products. Thus, information on market shares and prices had to be matched with information on the nutritional content of the respective products from the other two data sources. In order to obtain accurate information on the nutritional content of the products that are included in our empirical analysis, we compared, evaluated, and complemented two data sources. The USDA National Nutrient Database was used to complement the Nutritional
Quality Change Data, which provides exact information on the nutritional composition of all products offered in a large super-store but does not contain information on all products offered at the national level. Nonetheless, the latter set includes a complete census of all products in the most popular package size offered in 33 food product categories in a representative super-store in New England for the years 1992 through 1999. Second, we obtained information on the distribution of consumer knowledge about nutrition and nutrition label use by sampling individuals from the Diet and Health Knowledge Survey (DHKS) conducted by the U.S. Department of Agriculture. Third, we obtained information on the distribution of consumer demographic variables by sampling individuals from the Current Population Survey (CPS) carried out each year by the U.S. Bureau of the Census. Fourth, we matched the IRI Info-scan data with the quarterly expenditures on advertising for each of the products in the
four product categories taken from the Leading National Advertisers database for 1993-2002.
Impacts
This research focuses on the important determinants of consumer demand for food products and how they have been changing over the last decade. Understanding these factors is key information for assessing the competitiveness of U.S. agricultural producers and food processors as they choose product designs and marketing strategies; for understanding the benefits and costs of government regulations, such as labeling, intended to influence consumer food choice and, ultimately, public health; and for evaluating the impact of changing consumer demand for food on the agricultural and food sectors of the U.S. economy.
Publications
- No publications reported this period
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Progress 01/01/03 to 12/31/03
Outputs
During the last year, our work concentrated on developing and estimating a model of consumer food product choice and nutrition information/knowledge. The objective of this research is to integrate a latent variable model of consumer information about nutrition, which aims to capture unobservable concepts, with a discrete food product choice model. The methodology incorporates indicators of the latent variables provided by responses to survey questions to aid in estimating the model. A simulated estimator is used, which results in latent variables that provide the best fit to both the choice and the latent variable indicators. The integrated model consists of two parts: a discrete choice model and a latent variable model. Each part consists of one or more structural equations and one or more measurement equations. To estimate the integrated model it is necessary to use simulation approaches. In addition, we utilize the two-stage sequential estimation method. In the
first stage, we perform factor analysis on the indicators and use the fitted latent variables in the choice model. In the second stage, we integrate the choice probability over the distribution of the latent variables obtained from the factor analysis. The two-stage sequential method with integration gives us consistent estimates (Madanat et al. 1995, Morikawa 1989). We apply simulation techniques to approximate the integrals in the likelihood function and maximize the logarithm of the resulting simulated likelihood function across all individuals with respect to the parameters to be estimated in the model. The procedure to simulate the likelihood function is as follows: (1) for a given value of the parameter vectors, draw a particular realization of the parameter from its distribution, (2) compute the probability of the chosen alternative for each choice occasion, (3) insert the computed probabilities into the log-likelihood function to obtain a simulated individual likelihood
function as the product of the average likelihood functions across all choice occasions of the individual, (4) repeat steps (1)-(3) several times and average the results. This average is the simulated estimator that is unbiased by construction. Its variance decreases as the number of draws increases. It is also strictly positive, so that the logarithm of the simulated probability is defined. We use the Halton sequences to draw individuals from corresponding empirical distributions. The estimations and computations for this paper were carried out using MATLAB programming language on a personal computer. Gradients of the log simulated likelihood function with respect to the parameters were coded.
Impacts
This research focuses on the important determinants of consumer demand for food products and how they have been changing over the last decade. Understanding these factors is key information for assessing the competitiveness of U.S. agricultural producers and food processors as they choose product designs and marketing strategies; for understanding the benefits and costs of government regulations, such as labeling, intended to influence consumer food choice and, ultimately, public health; and for evaluating the impact of changing consumer demand for food on the agricultural and food sectors of the U.S. economy.
Publications
- Eliza M. Mojduszka and Rachel Everett. Endogenous Consumer Preferences and Knowledge About Nutrition. Selected Paper presented at the Annual Meetings of the American Association of Agricultural Economics, Montreal, Quebec, August 3-6, 2003.
- Mojduszka, Eliza M. 2003. Integration of a Product Choice Model and a Latent Variable Model of Nutrition Information. Under review: The American Journal of Agricultural. Economics.
- Eliza M. Mojduszka. Integration of a Product Choice Model and a Latent Variable Model of Nutrition Information. Selected Paper presented at the Annual Meetings of the American Association of Agricultural Economics, Chicago, IL, August 5-8, 2001.
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