Consumer Willingness to Pay for Organic and Animal Welfare Product Attributes: Do Experimental Results Align with Market Data?

This paper estimates distributions of consumer willingness to pay (WTP) for organic and animal welfare product attributes using market data and compares the results to existing experiment-based findings. We find that the WTP premium estimated for organic eggs is consistent with experimental results while estimated WTP premiums for animal welfare attributes (cage-free and pasture-raised eggs) are significantly lower than experimental findings. The results suggest the importance of considering biases such as social desirability bias when estimating the price premium for animal welfare attributes in experiments. In addition, despite the majority of studies reporting significant positive price premiums for a wide variety of organic products, consumers are not always willing to pay such premiums. We find that the overall price premium for organic potatoes is marginal. Our results also show that WTP premiums are heterogeneous across store brands.