Experimental Design
Using a lab-in-the-field experiment, this study aims to investigate consumers’ choices for imported organic and local food to help separate motivations based on perceived health and food-safety (private) benefits versus environmental (public) benefits.
We plan to recruit 400 participants who are interested in buying potatoes in several supermarkets and farmers’ markets in Taiwan. Participants will receive cash compensation and might use part of it for buying potatoes at the end of the experiment. To study the importance of private and public benefits on the WTP for potatoes, we give participants two types of information. With one treatment, we give participants information about the private benefit of buying organic by describing the smaller presence of pesticide residues on organic food. With a second treatment, we give participants information about the public environmental benefit of buying local food by noting the substantially less distance that Taiwanese-grown potatoes travel to market. These two information treatments result in four conditions, to which participants are randomly assigned: (1) control group without information; (2) pesticide residue information (private benefit) treatment;(3) food miles information (public benefit) treatment; and (4) pesticide residue and food miles information treatment. After reading the information, we collect in a price list the WTP for four different types of white potatoes (local organic, local non-organic, imported organic, and imported non-organic potatoes) with the same weight and similar size (around three potatoes per bag). We use the Becker-DeGroot-Marschak (BDM) method to elicit WTPs. BDM is a mechanism widely used in experimental economics as an incentive-compatible procedure. If participants stated previously that their maximum WTP for the potatoes is greater than or equal to a randomly drawn selling price, then the participants acquire the potatoes at the selling price. If the maximum WTP for the potatoes is lower than the selling price, there will be no transaction. Participants will be taught about this method at the beginning of the experiment. Only one type of potato will be selected in the game of purchase, so all participants will receive cash only or a combination of cash and a bag of potatoes. After the WTP stage, participants complete a short survey about their knowledge and attitudes toward food and their socio-demographic information.
Information treatments: Participants receiving the private information treatment will receive the message: “A 2020 inspection report of the Agricultural Drugs and Toxic Test Institute of the Executive Yuan indicates that 617 root vegetables were randomly tested. 83 of them contained pesticide and fungicide residues. Intaking these chemicals might increase the risk on health. According to agricultural regulations, organic food produced in Taiwan is required to have zero pesticide residue” (Chiu et el., 2018 and Website of Council of Agriculture in Taiwan). We expect the information to increase WTPs for organic potatoes, including imported and local organic ones. On the other hand, participants receiving the public information treatment will receive the following message: “Imported food, whether it is organic or not, is packed, refrigerated, and shipped with long distancing. For example, local potatoes in Taiwan travel less than 115 miles, but imported potatoes travel over 6324 miles on average before they are consumed. It costs more fossil fuels than for local food, and it could bring a burden on the environment” (Grebitus et al., 2013 and Website of Council of Agriculture in Taiwan). We expect the information to increase WTPs for local potatoes, including the local organic and local non-organic ones. Participants in the third information treatment group will receive both messages. We expect that after receiving both pieces of information, WTPs for imported organic potatoes will be higher than WTPs for local non-organic potatoes, as participants may be more concerned with private benefits than environmental benefits.
While information effects are the main subject of this study, heterogeneity among consumers may also play a significant role. We expect that by controlling for all other demographic characteristics, people with more knowledge about food will be less influenced by the information we provide. We also anticipate that people who are more altruistic, people who trust the agricultural regulations in Taiwan, and people who have more pro-environmental attitudes will act differently from others.