Which Credence Production Attributes Do Consumers Prefer? The Case of Milk

The interest of consumers for non-traditional food production attributes like antibiotics free and animal welfare have made consumer preferences more complex. These new attributes, usually non-identifiable by inspection or experience of the product are called credence attributes. The objectives of this study are to analyze consumer preferences for milk production attributes by eliciting the relative importance of these attributes for consumers, and to identify possible sources of heterogeneity related to consumer characteristics and actual purchase data. The research method used to elicit consumer preferences is Paired Comparison Method. Consumers from California and Texas were administered the online survey questionnaire in January 2017. The production attributes examined are organic, antibiotic free, non-Genetically Modified Organisms (GMO), production without growth hormones, humanely raised, free-range and grass-fed. Random Parameters Logit model was used for the estimation of participants’ preferences and the calculation of preference shares. Our results show that the most preferred production attributes are produced without growth hormones and animal welfare in both regions, with each attribute commanding a preference share greater than 20.0%. In general, there are differences in the ranking of the attributes between California and Texas, with the most significant being the 4.6% difference in the preference share of non-GMO attribute. Individual preference shares were estimated to examine demographic characteristics and buying habits of the participants as sources of heterogeneity in consumer preferences. Heterogeneity is found within the two regions with characteristics like gender, race and education influencing preferences. Advisor: Kathleen Brook