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A better conversation with consumers about farm animal welfare

A better conversation with consumers about farm animal welfare. Bailey Norwood Associate Professor Jayson Lusk Professor and Willard Sparks Endowed Chair of Agribusiness Department of Agricultural Economics Oklahoma State University.

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A better conversation with consumers about farm animal welfare

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  1. A better conversation with consumers about farm animal welfare Bailey Norwood Associate Professor Jayson Lusk Professor and Willard Sparks Endowed Chair of Agribusiness Department of Agricultural Economics Oklahoma State University A better conversation with consumers about farm animal welfare

  2. A better conversation with consumers about farm animal welfare (A) The farm animal welfare issue (B) A Calibrated Conjoint-Auction Method (C) Interesting empirical results A better conversation with consumers about farm animal welfare

  3. The Farm Animal Welfare Debate: Where We Have Been Section A

  4. Productivity Gains Mostly Benefit Consumers Section A

  5. John Steinbeck in Travels With Charley Even while I protest the assembly-line production of our food, our songs, our language, and eventually our souls, I know that it was a rare home that baked good bread in the old days.Page 83. 1962 Section A

  6. But what about the animals? Section A

  7. The Farm Animal Welfare Debate: Where We Are Going Section A

  8. The Farm Animal Welfare Debate: What Makes Chickens Happy? • Determinants of Hen Welfare • Space per hen • Barn space per hen • Beak trimming • Room for scratching • Nest availability • Free-range access • Group size Section A

  9. The Farm Animal Welfare Debate: An Interesting Question Is this worth $0.60 more per dozen? Let us ask consumers. Especially informed consumers. Section A

  10. Conventional Valuation: Overview Estimate some regression: Bid = a0 + a1(X) e.g. indicate your auction bid Section B

  11. We want to measure individual values for 41 attribute levels. Section B

  12. We want to measure individual values for 41 attribute levels. • But this is impossible to do using standard valuation methods. • Is each person going to submit 41 bids? • We wish to avoid the use of random parameter logit models. • We need a system that helps respondents behave rationally. • Respondents cannot “keep their thoughts” straight when perusing goods with 41 possible attributes/attribute levels. • Want to avoid preference reversals, excessive-choice effects. Section B

  13. Choice Experiments Are No Better Imagine Choosing Between Good A and Good B More Than 100 Times Section B

  14. Solution: A Calibrated Auction-Conjoint Method Step 4 Submit bids Step 1 Rate the desirability of many attribute levels Utility Function auction bids Step 2 Rate the relative attributes Step 3 Calibrate utility function to generate desirable bids Section B

  15. Step 1: Rate the Desirability of Each Attribute Level (3-3)/(9-3) = 0.00 (4-3)/(9-3) = 0.17 (9-3)/(9-3) = 1.00 Section B

  16. Step 2: Indicate the Relative Importance of Each Attribute Section B

  17. Describe Five Egg Production Systems Section B

  18. Four Egg Production Systems Barn System Cage System Section B Aviary w/ Free-Range System Aviary System

  19. Step 3: Calibrate Utility Function Step 4: Submit Bids Section B

  20. We ask subjects to construct their own utility function, and verify it with a real auction Utility (ignoring price) = (Points to Attribute)(Rating of Attribute Level) Utility of Cage Eggs = (Points to Space)(Rating of 48 sq in) + (Points to Free-Range)(Rating of no access) = (25)(0) + (10)(0.25) = 2.5 Utility of Cage-Free Eggs = (Points to Space)(Rating of 150 sq in) + (Points to Free-Range)(Rating of access/protection) (25)(1) + (10)(1) = 35 Auction Bid for Cage Eggs = $1 Bid Premium for Cage-Free Eggs is then (utility difference) / (Points to Price) = (35 – 2.5) / 65 = 0.5 Bid Cage Eggs = $1 Bid Cage-Free Eggs = $1.5 Section B

  21. Advantages of Calibrated Conjoint Auction Method • Low computational burden (when using computers) • Induces rationality (preference reversals impossible) • Can compute bids for any combination of attribute values, not just those in the auction • Can analyze large numbers of attributes and attribute levels • Observe individual-level behavior directly • Did you notice there is no error term? Section B

  22. Application Locations: Dallas, Chicago, and Wilmington, NC Subjects: 300 total, in 25 person sessions Good: 150 in eggs, 150 in hog Information: objective description of farm production practices and animal welfare factors Auction: 5 egg or pork products, real BDM auction Section C

  23. Application Is this worth $0.60 more per dozen? Let us ask consumers. Especially informed consumers. Section C

  24. Thank You! Questions? Comments? Insults?

  25. A Final Thought. This IS a Big Issue. From Racism to Specism Specism- the act of placing a higher moral or ethical value on one species over others. Utilitarianism Animal rights view Species-integrity view Agent-centered view Hybrid view Peter Singer

  26. A Final Thought. This IS a Big Issue. Don’t underestimate society’s ability to change

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