Tackling heterogeneity in consumer willingness to pay for food attributes: an application to traditional foods

Balogh, Péter and Gorton, Matthew and Popp, József and Lengyel, Péter and Békési, Dániel (2015) Tackling heterogeneity in consumer willingness to pay for food attributes: an application to traditional foods. Food Policy. pp. 1-36. ISSN 0306-9192 (Submitted)

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Abstract

Reflecting growing interest from both consumers and policymakers and building on recent developments in Willingness to Pay (WTP) methodologies, we evaluate consumer preferences for a traditional food product. Specifically this draws on stated preference data from a discrete choice experiment, considering the traditional Hungarian mangalitza sausage. A WTP space specification of the generalised multinomial logit model is employed, which accounts for not only heterogeneity in preferences but also differences in the scale of the idiosyncratic error term. Results indicate that our specification is especially useful, as it yields – unlike models with simulated WTPs –easily interpretable WTP distributions. Empirical findings reveal significant preference and scale heterogeneity. Importantly, by capturing respondents’ observable characteristics that influence their WTP for specific product traits, our approach makes it easier for marketers and policy makers to identify and target promising consumer segments.

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