Wednesday, April 20, 2011

Willingness to Pay: Livestock

Awono, Dupraz, and Vermersch, (2011) “Consumer willingness to pay for attributes of west-African poultry: using the microeconomics of implicit price,” GREDI Working Paper 11-01.
By west-African they mean Cameroon. They estimate a hedonic function to get at consumers’ willingness to pay for each attribute. They find that the most important attributes are low cost, being sold in separate parts, and distance to find it (the further the distance, the greater the desire for separate, ready-to-cook parts). This gives frozen chicken – imported from Europe or Brazil – a decided advantage over local “wet” market chicken grown locally. Attributes that were not significant included: taste, product quality, household size or occupation, or education. Imported chickens are blamed with putting many local poultry farmers out of business. The main item in favor of local chicken is that you can haggle over prices.

That apparently is not so much the case in China: “They insist on having the animal killed in front of them so they can guarantee it’s fresh. They need to see the gleam in the animal’s eye so they know the merchant is not cheating them.” Oh, the importance of a marketplace based on trust and enforced quality standards!

Among desirable attributes for meat in general is a certain degree of safety. Food safety is significantly increased by cooking your meat thoroughly. One article claims that we have gotten much better at getting rid of pathogens and contaminants in our pork supply chain, so we ought to be able to cook pork at lower temperatures while maintaining adequate safety, as we do with better cuts of beef. But the culture is so accustomed to only well-done pork that there is little call for recipes with medium-done pork.

Behavioral economics has some interesting things to say about willingness to pay in development contexts. Glennerster and Kremer present a handful of interesting conclusions, based largely on RCTs. For one thing, conditional cash transfers (CCTs) are more effective than we think … and often on “control” groups: Malawi varied up the amount of the conditional cash transfer and even the smallest amount was enough to get the average effect, families in Mexico and Columbia who are near the cutoff for receiving the CCT are also more likely to send their children to school without receiving a penny themselves, scholarships for the best-performing girls in Kenya also induced greater effort from boys. Despite all this wonderfulness, the most cost-effective way of getting more students into school was providing information (in Madagascar) while CCTs in Mexico were the least effective. They have similar fun with health research on intervention uptake. Small incentives matter for individual behavior.

No comments:

Post a Comment