Amir HeimanDepartment of Agricultural Economics and Management, The Hebrew University
of Jerusalem, Israel.
Paper prepared for presentation at the 17th ICABR Conference“THE POLITICAL ECONOMY OF THE BIOECONOMY :
BIOTECHNOLOGY AND BIOFUEL”Ravello, Italy, June 18-22, 2013
Introduction• GM products that require lower usage of pesticide are
expected to be preferred over the conventionally grown and riskier alternative
• Firstly because their price is lower (Moschini, Lapan, & Sobolevsky, 2000)
• Secondly because it reduces risk (Hamilton, Sunding, & Zilberman, 2003).
• Consumers’ loss aversion (Tversky & Kahneman, 1974) should have amplified their willingness to pay for lower level of pesticides in food products.
• However this conjunction was not supported in empirical studies.
•
Empirical studies suggests that
• The argument of lower pesticide is either– Discounted (Poortinga & Pigdeon, 2004),– or– reduces buyers’ willingness to purchase GM
products that reduce risk (Chern, Rickertsen, Tsuboi, & Fu, 2002; Huffman, 2010; Krishna & Qaim, 2008).
• Higher accessibility to risk is likely to shift consumers from heuristic based to a systematic choice process (Chaiken, 1980) and that should have increased the effectiveness of risk reduction message.
• On the other hand a message on lower pesticide level may increase the association between the product and risk (Tybout, Calder, & Sternthal, 1981) causing consumers to avoid the product.
• Personal perception of risk increases with the ease of recall of hazardous events (Tversky and Kahneman 1973).
• Priming risk increases the accessibility thereto, resulting in an increased likelihood of avoiding the hazardous behaviour (Rothman & Kiviniemi, 1999) and adopting preventive measures.
• For example, Raghubir and Menon (1998) showed that increasing the accessibility to risk (HIV) cancelled out the self confident bias.
• Priming risk may frighten the consumer.• Frightening consumers is widely used in
campaigns that aim to educate individuals to adopt more cautious behaviour and to encourage allocation of more resource to prevention activities.
• However, risk may operate a defence mechanism that will make the message ineffective.
• A fear-based message initiates two mechanisms that affect individual’s response in opposing way.– A defence mechanism that aims to reduce evoked fear that
discount or oppose the threatening message. – On the other hand, there is a tendency to cope with the
message by adopting its recommendation. • Since these forces are affecting consumers in opposing
ways the response function to fear is seldom characterized by an inverse U shape suggesting that is an optimum in medium level frightening message.
Anti smoking campaign –frightening strategy
Anti smoking campaign – light (medium) frightening
Sublet frightening
• Consumers are likely to vary in their response to frightening information that primes death.
• Consumers motivation systems either promotion or prevention moderates their response to health threats (Higgins, 1997).
• Preventive health behaviours such as non-smoking, physical exercise, and keeping weight loss diet, depend on consumers perceived self-efficacy (Conner & Norman, 2005; Luszczynska, & Schwarzer, 2005).
• Consumers with high self-efficacy are more likely to increase the intensity of health-related activities when an illness occurs, whereas individuals with low self-efficacy would sense feelings of hopelessness (Sue, and Sue, 2003).
• Risk and tendency to adopt preventive behaviour means are related.
Empirical Study-Methodology
• We test whether information that primes chronic illness and supports legalization of medical biotechnology research increases the appeal of low pesticide GM food product using experimental survey methodology.
• The questionnaire was handed out to 300 consumers who were randomly allocated to one of the three experimental groups: control and two treatments.
• The difference between the three experimental groups is in the introduction paragraph while the questionnaires were identical both in content and order of questions
Manipulations: Group 1 Medium Frightening
• “Think of someone you know who is suffering from a chronic illness, such as kidney failure that requires daily dialysis, dementia, … , causing them a great deal of pain. Progress in modern medicine has made is possible to prolong patients' lives and ease their discomfort, yet it is still offers no real cure. Today, some of these patients can be cured using treatment based on genetic engineering. Recent studies show human organs can be grown in a lab, using stem cells, and later used to replace organs damaged by a disease. As you may know, stem cell experimentation is prohibited worldwide, yet there are those who think genetic engineering should be allowed when treating incurable illnesses. The Israeli governments is now considering whether or not to approve clinical research in human cells and is considering citizens opinion. You are asked to vote whether you support GM research and its applications or not”
High level of frightening
• The same as medium level but the subject is the responder …” - Imagine you are chronically ill, to the extent you require nursing assistance in order to perform the basic daily tasks….”
Products
• Taste potato• Antioxidant potato• High temperature potato• Low calorie potato
Results
• Figure (1) suggests that support in genetics experimentation increases with the severity of the threat to personal health
Control Medium Strong0
0.5
1
1.5
2
2.5
3
3.5
Resistance to biotech expiremntation
Segmentation of consumers into the four segments across the four types of potatoes
Taste Antioxidant
High temperature
Low calories
GM buyer 14.29 14.29 9.97 26.33 Switcher (regular – GM) 75.08 73.09 63.46 61.67
Regular only 4.98 8.64 22.59 9.00 Double switching 5.65 3.99 3.99 3.00
Taste Antioxidant High temperature Low calories0
1020304050607080
Consumers' profile across potatoes
GM buyer Switcher (regular – GM)Regular only Double switching
Likelihood of choosing the GM alternative when the GM
offers improved benefit and price is not accessible.The GM offers the benefit of:Treatments N Mean
Likelihood
N Mean Likelihoo
d
N Mean Likelihoo
d
N Mean Likelihoo
d0.73 0.62 0.76 0.53
-0.04 -0.05 -0.04 -0.050.67 0.69 0.76 0.51
-0.05 -0.05 -0.04 -0.050.69 0.77 0.57
-0.05 -0.04 -0.060.69 0.66 0.76 0.53
-0.03 -0.03 -0.02 -0.03
100
Total 300 301 301 301
High level frightening1000.68 (0.05) 100 100
Medium frightening96 97 97 97
Taste Antioxidant High temp Low cal
Control 104 104 104 104
Priming risk (consequences treatments) did not significantly affect the distribution consumers likelihood of purchasing the GM potatoes except for the choice of the low calorie GM potato wherein medium threatening information reduced the number of switchers while increasing the number of consumers who refrain from buying GM potato
Average switching price for GM potatoes in the switcher segment
Product Taste Anti oxidantHigh temp
Low calorie
Mean 5.209a 5.34b 5.41c 5.09a,b
SE 0.06 0.06 0.07 0.07N 220 227 191 185
Consumers’ are willingness to pay more for the high temperature potatoes relative to all other varieties followed by the antioxidant variety
Demand for the Low calorie potato cross treatment
20 30 40 50 60 70 80 90 100 1100
1
2
3
4
5
6
7
8
Low cal control vs manipulation
controlmanipulation
quantitiy
price
Comparing demand for the high temperature potato between control and medium groups
0 10 20 30 40 50 60 70 80 900
1
2
3
4
5
6
7
8
High temp control vs manipulation
controlmanipulation
quantitiy
price
Comparing demand across products- control
0 10 20 30 40 50 60 70 80 90 1000
1
2
3
4
5
6
7
8
demand - medium
tasteantihightemplowcal
quantity
price
The effect of frightening the case of Low calorie potato
treatment
TR only GM Buyer
Switcher TR-GM Total
N 6 29 68 103
control % 22.22 36.71 36.76 35.40 Medium frightening N 15 26 53 94
% 55.56 32.91 28.65 32.30
Strong frightening N 6 24 64 94
% 22.22 30.38 34.59 32.30
Total N 27 79 185 291
Most consumers are willing to change their initial choice from conventional to GM potato at the right price when the GM offers additional benefit.
The likelihood that a consumer will not consider purchasing GM products designed to reduce health hazards is thus paradoxically lower in situations where risk is more accessible
Comparing the demand for the four types of potatoes across treatments
0 20 40 60 80 100 1200.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8.00
Demand control
Qtaste QantiO Qhightemp Qlowcal
Axis Title
Axis Title
0 10 20 30 40 50 60 70 80 90 1000
1
2
3
4
5
6
7
8demand - medium
taste anti hightemp lowcal
quantity
price
Risk factors• We extracted three factors explaining 53.4% of the variance • The first factor, termed the considering (serious) individual,
is characterized by choosing a balanced (hedged) risk portfolio and avoiding risky sports or behaviors.
• The second factor, termed the impulsive individual, is characterized by risky behavior such as not wearing seatbelts and having a greater tendency toward making implosive investments.
• The third factor, termed the careless individual, is characterized by ignoring food labels and eating fast and processed food.
Choice
3
1mj T j H j R mj j
mV w T w H w R P
The choice between GM and conventional products is a function of consumers’ perceptions of their contribution to health by the GM and the conventional potatoes, tastiness, importance of potato in families diets, risk profiles, support of biotechnology experimentations, and the cross-effect of risk profiles and information treatments.Formally, the value of alternative j is
B Sig. B Sig. B Sig. B Sig.
Testiness of GM 0.25 (0.15) 0.09 0.18 (0.18)
0.3 0.20 (0.18)
0.26 0.46 (0.15)
0
Contribution to health GM 1.03 (0.19) 01.07 (0.16) 0 0.99 (0.16)
0 1.15 (0.16)
0
Testiness of ordinary potato -0.03 (0.17) 0.85-0.18 (0.18) 0.34 -0.11 (0.19)
0.58 -0.15 (0.17)
0.4
Contribution to health of ordinary potato -0.48 (0.16) 0-0.27 (0.15) 0.08 -0.40 (0.16)
0.02 -0.39 (0.14)
0.01
Importance of potato in diet 0.39 (0.16) 0.010.34 (0.17) 0.04 0.36 (0.18)
0.05 0.22 (0.15)
0.14
Education (years) 0.08 (0.08) 0.310.12 (0.08) 0.11 0.11 (0.09)
0.22 0.13 (0.08)
0.09
Resistance to GM -0.53 (0.13) 0-0.55 (0.12) 0 -0.45 (0.13)
0 -0.45 (0.12)
0
Risk FAC1 -0.29 (0.34) 0.4-0.33 (0.33) 0.32 -0.89 (0.37)
0.02 -0.65 (0.30)
0.03
Risk FAC2 0.19 (0.31) 0.540.50 (0.32) 0.11 0.96 (0.39)
0.01 -0.19 (0.28)
0.5
Risk FAC3 0.01 (0.29) 0.970.35 (0.31) 0.27 0.58 (0.37)
0.12 0.26 (0.28)
0.36
Risk FAC1 *Ver 0.49 0.56 0.04 0.26
Risk FAC1*Ver1 0.52 (0.44) 0.250.44 (0.44) 0.32 1.06 (0.49)
0.03 0.65 (0.41)
0.11
Risk FAC1*Ver2 0.21 (0.46) 0.650.41 (0.48) 0.4 1.23 (0.52)
0.02 0.16 (0.43)
0.72
Risk FAC2 *Ver 0.23 0.02 0.13 0.98
Risk FAC2*Ver1 -0.38 (0.41) 0.35-1.20 (0.45) 0.01 -1.05 (0.52)
0.04 -0.07 (0.39)
0.85
Risk FAC2*Ver2 0.41 (0.48) 0.39-1.01 (0.46) 0.03 -0.58 (0.54)
0.28 -0.01 (0.43)
0.99
Risk FAC3 *Ver 0.63 0.38 0.39 0.36
Risk FAC3 *Ver1 0.10 (0.42) 0.8-0.27 (0.42) 0.51 -0.62 (0.50)
0.21 -0.55 (0.40)
0.17
Risk FAC3 *Ver2 0.46 (0.48) 0.35-0.62 (0.44) 0.16 -0.57 (0.49)
0.25 -0.12 (0.42)
0.78
Constant -3.27 (1.85) 0.08-4.70 (1.78) 0.01 -3.85 (1.97)
0.05 -6.07 (1.82)
0
Taste Antioxidant High temp Low cal
Estimation results suggest that
• Taste affects choices only regarding products that are not designed to reduce risk, and whose benefits are either improved taste or lower calorie density, which helps to maintain physical attractiveness
• The greater a potato’s contribution to health, the higher the likelihood that it will be chosen
• The stronger level of support in GM (experimentation) higher the likelihood of choosing a GM alternative.
How is attitude toward risk affecting choice?
• Main effects:– Risk factor (1), which represents risk aversion, is
negatively related to the likelihood of choice of high-temperature and low calorie potatoes.
– Risk factor (2), which risky behavior such as not wearing seat belts and have a greater tendency to make implosive investments, are more inclined to chose the high temp GM potato
Cross effects of risk profiles and information treatments:
• The cross effects of risk profiles and information treatments affected significantly only the “Eco Human” and the Implosive type consumers, while not affecting the “careless” consumers.
• The first manipulation counterbalanced the negative predisposition of “Eco Human” toward purchasing the high temp potato.
• The sum of the direct and cross effects is positive after exposure to medium level frightening message.
• Frightening information (treatment 2) cross effect with Factor (1) is positive in the case of high temperature potato, i.e., the likelihood of purchasing the product that is designed to reduce health risk increases for the “analytical: (eco-human) individual.
• The cross effect of medium level frightening and Factor (2) is negative for the high temperature and antioxidant potatoes and the cross effect of high level frightening negative for the antioxidant type.
Summary
• Information treatments affected choice in two ways:– Directly through interaction with attitude toward risk
(risk profiles) – and – Indirectly by increasing the support (decreasing
resistance) to biotech experimentation. – The effect of information on choices is moderated by
attitude toward risk.– Adjusting products and advertising appeal to
different segments is likely to increase GM adoption.
