Consumers' willingness to pay for organic and local food: an experimental study using structural equation modeling
University of Delaware
Among the fastest growing food trends in the US is the consumption of organic and local food. This thesis studied the psychological determinants of willingness to pay (WTP) and purchase behavior for different types of organic and local food. Besides, the framework and hypotheses derived from the Theory of Planned Behavior (TPB) were tested by the empirical data collected from an auction experiment. Specifically, attitudes, norms and perceived behavior control were modeled to impact consumers' WTP and purchase behavior by using structural equation modeling (SEM). The data used in this study was from an auction experiment conducted in the Experimental Economics Laboratory for Policy and Behavioral Research at the University of Delaware. Eleven experimental sessions including auctions and questionnaires were conducted in 2010 and a sample of 128 was attained. The agricultural products included egg, tomato, beef and milk. For the analysis, two methods were applied, factor analysis and structural equation modeling. Exploratory factor analysis was conducted on identification of latent factors representing consumers' perception of organic and local food. Then the SEM method was applied to the test of latent factors and their relationships with consumers' WTP and purchase behavior for organic and local food under the framework of the TPB model. Comparisons between organic and local food and different types of food within organic and local version were also made. Results supported the applicability of the TPB to the understanding and prediction of consumers' intentions and behaviors for organic and local food. In general, attitude and norm showed positive effects on WTP; while perceived behavioral control (PBC) exerted significant negative effect on purchase behavior; norm was found to be a significant positive predictor for attitude for both organic and local food. However, comparison between models of different kinds of organic and local food indicated that results varied between different food products and there existed attitude-WTP and intention-behavior gaps in several models. These findings suggested several potential directions for researchers and marketers to better understand consumers' intentions and purchase for organic and local food, such as (i) discovering and including other psychological constructs which mediate impacts of attitude and WTP on behavior, especially for local food; (ii) develop different measures for psychological variables of various kinds of food which have different attributes associated.