Abstract #37

# 37
Willingness to pay for pork chops and bacon: Effects of perceived farm sizes and information shocks.
Ann Cummins*1, Nicole Widmar1, Joan Fulton1, Candace Croney1, 1Purdue University,.

This research utilizes a willingness to pay (WTP) model for a variety of pork, specifically pork chop and bacon, attributes. There has been an identified gap between consumer’s perceptions and the reality of even something as simple as the size of pig farm which pork originated from. This presentation explores the effect of the perceived size of pig farm on consumers’ WTP for verified pork attributes. The data for this analysis is from a nationally representative survey (in terms of age, sex, income, and region of residency). A total of 1,004 respondents and 10,040 choice situations were obtained. Along with a collection of demographic, educational, perceptions about farming, and other information is used as part of the analysis, participants experienced a simulated shopping experience (designed choice experiment) where they made purchasing decisions about certified pork products with different attributes. The attributes included price per pound, permitted use of individual crates or stalls, farm size, antibiotic use, and certification entity. The choice experiment methodology is used for this analysis and the random parameter logit model is used to estimate the consumers’ WTP for the different pork product attributes. The first set of analyses look at the average WTP for these two pork products in relation to individual consumer’s self-reported perception of the farm size on which they believe most pigs raised for pork are raised (which they provided before entering the simulated shopping experience). The second set of analyses uses the choice experiment data, but in addition uses an information shock, in which a subset of approximately half of the respondents were randomly selected and given an information shock with included NASS statistics on the true pig farm size in the U.S. These responses are then compared between perceived size of pig farms in the US, the information shock, and consumers’ WTP for pork verified attributes including farm size. We find that certain consumer segments are willing to pay statistically significant and positive amounts for the verified attributes studied. Further, there are differences in those WTP values amongst pork products, verifying parties, and the specific attributes in question.

Key Words: bacon, pork chops, willingness to pay

Speaker Bio
Ann Cummins has been a Research Assistant and Masters Student in the department of Agricultural Economics since August of 2013. She has a strong interest in Agribusiness and applied research related to the impacts of management decisions, marketing, and consumer preferences. Ann graduated in 2011 from Saint Mary’s University of Minnesota with a bachelor’s degree in Mathematics. She enjoys using applying her mathematical skills combined with economic theory to gain new insights regarding business decision-making and insights on consumer preferences.