Consumer Willingness to Pay for Genetically Modified Food Labels in a Market with Diverse Information: Evidence from Experimental Auctions

TLDR

The debate over GM foods has sparked calls for mandatory labeling versus opposition. This study investigates how the presence of GM labels influences consumers’ willingness to pay. Adult consumers completed a statistical economics experiment measuring willingness to pay for vegetable oil, tortilla chips, and potatoes with and without GM labels. Participants discounted GM‑labeled foods by roughly 14%, and the results show that the order of labels and randomization of treatments also affect willingness to pay.

Abstract

With the continuing controversy over genetically modified (GM) foods, some groups advocate mandatory labeling of these products, while other groups oppose labeling. An important issue is how GM labels affect consumers' willingness to pay for these food products in the market. Using a statistically based economics experiment with adult consumers as subjects, we examine how willingness to pay changes for three food products-vegetable oil, tortilla chips, andpotatoes-when GM labels are introduced. Participants in the experiments discounted GM-labeled foods by approximately 14% relative to their standard-labeled counterparts. The evidence also showed that sequencing of food labels affects willingness to pay, and that randomizing treatments is an important methodological feature in experiments of willingness to pay.