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New WTP Estimates of the Demand for Food Safety

New WTP Estimates of the Demand for Food Safety. James K. Hammitt Kevin Haninger Harvard Center for Risk Analysis. Outline. Motivation Survey instrument and sample Descriptive statistics WTP estimates Conclusion. Motivation.

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New WTP Estimates of the Demand for Food Safety

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  1. New WTP Estimates of the Demand for Food Safety James K. Hammitt Kevin Haninger Harvard Center for Risk Analysis

  2. Outline • Motivation • Survey instrument and sample • Descriptive statistics • WTP estimates • Conclusion

  3. Motivation • Most cases of food-borne illness are non-fatal, short duration, caused by microbial pathogens • There are few estimates of WTP to reduce risk of comparatively minor morbidity • We conducted stated preference (contingent valuation) study of WTP to reduce risk of food-borne illness, focusing on acute episodes

  4. Survey Administration • Knowledge Networks internet panel • Representative of general population (on measurable attributes) • 61% of invited panel members completed survey • 3% excluded (did not eat any of three foods or did not answer WTP questions) • Intervention: choose food produced by “superior safety system” (safer, more expensive) or conventional • Double-bounded dichotomous-choice valuation questions

  5. Survey Instrument • Each respondent values two changes • Own risk • Risk to child (2 – 18 yrs) in household (if applicable) • Choice described as “food only [you / your child] will eat” • Risk of illness from microbial pathogens on food • Risk reduction and cost expressed per meal or per month (28% of respondents)

  6. Risk Attributes • Risk reduction: [4 or 2] to 1 per 10,000 per meal • Risk reduction = [3 or 1] per 10,000 • Visual aid: white square w/ fraction colored red • Duration: 1, 3, 7 days • Severity: mild, moderate, severe • Mortality risk conditional on illness: 0, 1/10,000, 1/1,000 • Food: chicken, ground beef, packaged deli meat • Initial bid: between $0.04 and $4.00 per meal • Follow-up bids half and twice as large • Per month: risk and bid calculated using respondent-reported consumption frequency

  7. Severity • You will have an upset stomach and will feel tired, but these symptoms will not prevent you from going to work or from doing most of your regular activities. • 2. You will have an upset stomach, fever, and will need to lie down most of the time. You will be tired and will not feel like eating or drinking much. Occasionally, you will have painful cramps in your stomach. In addition, you will have some diarrhea and will need to stay close to a bathroom. While you are sick, you will not be able to go to work or do most of your regular activities. • 3. You will have to be admitted to a hospital. You will have painful cramps in your stomach, fever, and will need to spend most of your time lying in bed. You will need to vomit and will have severe diarrhea that will leave you seriously dehydrated. Because you will be unable to eat or drink much, you will need to have intravenous tubes put in your arm to provide nourishment.

  8. Structure of Survey • Introduction • Experience with food-borne illness • Estimated prevalence • Practice valuation questions • Similar to elicitation • 1st practice: dominant choice, feedback to respondent, opportunity to correct dominated choice • 2d practice: no dominance but feedback to respondent interpreting choice (i.e., “safer but more expensive,” “less safe but less expensive”) • Valuation questions • Follow-up questions • Scenario acceptance • Food-handling practices

  9. The table below summarizes the differences between the Superior Safety System chicken and the standard chicken. Please consider which type of chicken you would buy for a meal that only you would eat. Remember that the extra money you spend for a meal with Superior Safety System chicken is money that you could no longer spend on other things you might want or need. Whether you eat the Superior Safety System chicken or the standard chicken, if you get sick: You will have an upset stomach, fever, and will need to lie down most of the time. You will be tired and will not feel like eating or drinking much. Occasionally, you will have painful cramps in your stomach. In addition, you will have some diarrhea and will need to stay close to a bathroom. While you are sick, you will not be able to go to work or do most of your regular activities. You will have these symptoms for 3 days. There is a 1 in 10,000 chance that you will die from this sickness. If Superior Safety System chicken cost $0.50 more per meal than standard chicken, which type of chicken would you purchase? ○ Standard ○ Superior Safety System

  10. Sample Mean (std dev)

  11. Household Comparison(means)

  12. Estimating WTP • Double-bounded binary-choice response • Maximum-likelihood regression estimates assuming lognormal error • Separate models and subsamples • Reduce own risk, no child in household (N = 2467) • Reduce own risk, child in household (N = 1160) • Reduce risk to child (between 2 and 18)

  13. Regression Estimates

  14. Sensitivity of WTP • More sensitive to probability change than to severity or duration of illness • Less than proportional to risk change (for adult w/o child, WTP varies by 1.9, risk by 3) • Less sensitive to severity and duration for children than for adults • WTP per month proportional to frequency of consumption

  15. Demographics & Food Type

  16. Risk Perception & Behavior

  17. Value per Statistical Case • Median WTP (lognormal error) • Sample-mean respondent • Specified illness • Mean of value per case for larger and smaller risk reductions

  18. Value per Statistical Case($1,000, std. err.)

  19. Value per Statistical Life • WTP not significantly related to conditional mortality risk • Point estimates: $9 – 25 million • Study underpowered for estimating VSL

  20. WTP per QALY • Estimated value per case varies little with duration (1 – 7 days) • 28% more for 7 days than 1 day (adult w/o child) • Varies little with severity • 48% more for severe than mild case (adult w/ or w/o child) • Elicited health-related quality of life (HRQL) for current health and each severity • Loss in HRQL 1.9 to 2.3 times larger for severe than mild case • Value per case varies much less than proportionately to loss of HRQL

  21. HRQL by Severity(mean, std dev)

  22. Conclusion: WTP per case of acute food-borne illness • Varies with potential victim • $8,000 – 16,000 for adult respondent • $24,000 – 31,000 for his/her child • Varies with food type, respondent characteristics • Higher for chicken than ground beef, packaged deli meat • Higher for women, blacks and Hispanics, less educated • Increases with perceived risk and confidence in intervention • Largely insensitive to duration & severity • ≤ 30% larger for a week than a day • ≤ 50% larger for severe than mild • Less sensitive for risk to child than to adult • Estimated WTP is less than proportional to expected loss in QALYs

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