Hostname: page-component-8448b6f56d-c4f8m Total loading time: 0 Render date: 2024-04-24T22:58:54.277Z Has data issue: false hasContentIssue false
  • English
  • Français

Do health benefits explain the price premiums for organic foods?

Published online by Cambridge University Press:  30 October 2009

Fred Kuchler ,
Katherine Ralston  and
J. Robert Tomerlin
Fred Kuchler*
Affiliation:
Agricultural Economists, Economic Research Service, U.S. Dept. of Agriculture, 1800 M St., NW, Washington, DC 20036-5831;
Katherine Ralston
Affiliation:
Agricultural Economists, Economic Research Service, U.S. Dept. of Agriculture, 1800 M St., NW, Washington, DC 20036-5831;
J. Robert Tomerlin
Affiliation:
Chemical exposure assessor with Novigen Sciences, 1730 Rhode Island Ave., NW, Suite 1100, Washington, DC 20036.
*
Corresponding author is Fred Kuchler (fkuchler@econ.ag.gov).
Get access

Abstract

This paper examines whether the dollar value of health benefits that consumers derive from organic food could account for the price premiums they pay. Price and sales data from realized transactions are inadequate to reveal consumer preferences for health benefits. Our exploratory alternative method estimates the value of health benefits to a hypothetical consumer who assesses risks as risk assessors do and values a unit reduction in all fatal risks equally, regardless of the source of any risk. Under these assumptions, our estimates of the value of health benefits derived from substituting an organic diet for a conventionally produced diet approach zero. For a common organic product, apple juice, we estimated the cost of reducing risks by buying the organic characteristic. The cost of averting each adverse health outcome is 27 to 461 times as large as the value of benefits. If the characteristics of our hypothetical consumer match those of the typical consumer, two inferences follow from our estimates of benefits and costs. First, the typical consumer is unlikely to purchase organic food for health reasons. Second, consumers who choose organic food could differ from typical consumers in several dimensions: perceptions of the level of risk from dietary intake of pesticides, perceptions of the nature of adverse health outcomes from pesticides, or in the importance attached to other attributes of organic food. Our analysis is exploratory partially because there are several behavioral assumptions implicit in the values we calculate. Also, we focus on risks that can be quantitatively estimated, measuring the probability of an adverse health outcome with readily accessible data. Currently, only cancer risks can be measured in terms of probabilities from readily accessible data.

Keywords

benefitscostsdietpesticidesrisks
Type
Articles
Information
American Journal of Alternative Agriculture , Volume 15 , Issue 1 , March 2000 , pp. 9 - 18
Copyright
Copyright © Cambridge University Press 2000

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

1.Buzby, J.C. 1993. A Cost-Benefit Analysis Using Contingent Valuation Data of Banning a Post-Harvest Pesticide from Use in Fresh Grapefruit Packinghouses. Ph.D. dissertation. Univ. of Kentucky, Lexington.Google Scholar
2.Chaisson, C.F., Petersen, B., and Douglass, J.S.. 1991. Pesticides in Food: A Guide for Professionals. Amer. Dietetic Assoc., Chicago.Google Scholar
3.Crutchfield, S., Buzby, J.C., Roberts, T., Ollinger, M., and Lin, C.-T.J.. 1997. An Economic Assessment of Food Safety Regulations: The New Approach to Meat and Poultry Inspection. U.S. Dept. of Agric., Econ. Res. Serv., Washington, DC. Agric. Econ. Rep. 755.Google Scholar
4.Dunn, J.A. 1995. Organic Food and Fiber: An Analysis of 1994 Certified Production in the United States. U.S. Dept. of Agric., Agric. Marketing Service, Washington, DC.Google Scholar
5.Engler, R. 1994. List of Chemicals Evaluated for Carcinogenic Potential. U.S. Environ. Protection Agency, Office of Prevention, Pesticides, and Toxic Substances, Washington, DC. Memorandum (Dec. 31).Google Scholar
6.Enns, C.W., Goldman, J.D., and Cook, A.. 1997. Trends in food and nutrient intakes by adults: NFCS 1977–78, CSFII 1989–91, and CSFII 1994–95. Family Econ. Nutr. Rev. 10(4): 1–15.Google Scholar
7.EPA. 1993. Status of Pesticides in Reregistration and Special Review. U.S. Environ. Protection Agency, Office of Prevention, Pesticides and Toxic Substances, Washington, DC. EPA 738-R-93-009.Google Scholar
8.EPA. 1996a. Proposed Guidelines for Carcinogen Risk Assessment. U.S. Environ. Protection Agency, Office of Research and Development, Washington, DC. EPA/600/P-92/003C.Google Scholar
9.EPA. 1996b. Office of Pesticide Programs Reference Dose Tracking Report. U.S. Environ. Protection Agency, Office of Pesticide Programs, Washington, DC. Mimeo (Feb. 23).Google Scholar
10.Evans, W.N., and Viscusi, W. K.. 1993. Income effects and the value of health. J. Human Resources 28:497–518.CrossRefGoogle Scholar
11.EWG. 1998. Suggested Probabilistic Risk Assessment Methodology for Evaluating Pesticides with A Common Mechanism of Toxicity: Organophosphate Case Study Environmental Working Group—January 1998. Submitted to the FIFRA Scientific Advisory Panel for the meeting March 24–25, 1998. Environmental Working Group, Washington, DC. Available at U.S. Environ. Protection Agency Web site http://www.epa.gov/oscpmont/SAP/1998/march/suggest.htm (verified Oct. 1999).Google Scholar
12.FDA. 1993. Food and Drug Administration Pesticide Program: Residue Monitoring 1992. J. Assoc. Off. Anal. Chem. 76(5): 127A–148A.Google Scholar
13.FDA. 1995. Procedures for the Safe and Sanitary Processing and Importing of Fish and Fishery Products: Final Rule. Federal Register 60(242):65095–200, Dec. 18. U.S. Food and Drug Admin., Washington, DC.Google Scholar
14.Food Marketing Institute. 1997. Shopping for Health 1997. Washington, DC.Google Scholar
15.GAO. 1994. Pesticides: Exposure to Residues of Canceled Pesticides. U.S. General Accounting Office, Washington, DC. GAO/RCED-95-23.Google Scholar
16.Goldman, B.J., and Clancy, K.L.. 1991. A survey of organic produce purchases and related attitudes of food cooperative shoppers. Amer. J. Alternative Agric. 6:89–96.CrossRefGoogle Scholar
17.Hammitt, J.K. 1990. Risk perceptions and food choice: An exploratory analysis of organic- versus conventionalproduce buyers. Risk Anal. 10:367–373.CrossRefGoogle ScholarPubMed
18.Hartman and New Hope. 1997. The Evolving Organic Marketplace. Bellevue, WA.Google Scholar
19.Jolly, D.A., Schutz, H.G., Diaz-Knauf, K.V., and Johal, J.. 1989. Organic foods: Consumer attitudes and use. Food Technol. 43(11):60, 62, 64, 66.Google Scholar
20.Magat, W.A., Viscusi, W.K., and Huber, J.. 1996. A reference lottery metric for valuing health. Management Sci. 42:1118–1130.CrossRefGoogle Scholar
21.Manchester, A. 1987. Developing an Integrated Information System for the Food Sector. U.S. Dept. of Agric., Econ. Res. Service, Washington, DC. Agric. Econ. Rep. 575.Google Scholar
22.Morrison, G.C. 1998. Understanding the disparity between WTP and WTA: Endowment effect, substitutability, or imprecise preferences? Econ. Letters 59(2):189–194.CrossRefGoogle Scholar
23.NCI. 1996. Cancer Factbook 1995. National Cancer Institute, Bethesda, MD. Available at Web site http://www.nci.nih.gov/public/factbk95 (accessed Oct. 1, 1996).Google Scholar
24.NRC (National Research Council). 1987. Regulating Pesticides in Food: The Delaney Paradox. National Academy Press, Washington, DC.Google Scholar
25.NRC. 1993. Pesticides in the Diets of Infants and Children. National Academy Press, Washington, DC.Google Scholar
26.Presidential/Congressional Commission on Risk Assessment and Risk Management. 1997. Risk Assessment and Risk Management in Regulatory Decision-Making, Final Report, Vol. 2. Available at RiskWorld Web site http://www.riskworld.com/Nreports/1997/risk-rpt/volume2/html/v2epaa.htm (verified Oct. 1999).Google Scholar
27.Sparling, E., Wilken, K., and McKenzie, J.. 1992. Marketing Fresh Organic Produce in Colorado Supermarkets: Final Report. Colorado State Univ., Fort Collins.Google Scholar
28.Thompson, G.D., and Kidwell, J.. 1998. Explaining the choice of organic produce: Cosmetic defects, prices, and consumer preferences. Amer. J. Agric. Econ. 80:277–287.CrossRefGoogle Scholar
29.USDA. 1996. Pesticide Data Program, Annual Summary Calendar Year 1994. U.S. Dept. of Agric., Agric. Marketing Service, Washington, DC. Available at Web site http://www.ams.usda.gov/science/pdp/download.htm (verified Oct. 1999).Google Scholar
30.USDA. 1999. Pesticide Data Program, Annual Summary Calendar Year 1997. U.S. Dept. of Agric., Agric. Marketing Service, Washington, DC. Available at Web site http://www.ams.usda.gov/science/pdp/download.htm (verified Oct. 1999).Google Scholar
31.Viscusi, W.K. 1992. Fatal Tradeoffs: Public and Private Responsibilities for Risk. Oxford Univ. Press, New York.CrossRefGoogle Scholar
32.Viscusi, W.K. 1995. Cigarette taxation and social consequences of smoking. In Poterba, J.M. (ed.). Tax Policy and the Economy. Vol. 9. MIT Press for National Bureau of Econ. Research, Cambridge, MA.Google Scholar