CONSUMERS' WILLIGNESS TO PAY FOR ADDITIONAL
INFORMATION ON FOOD QUALITY AND SAFETY
Terhi Latvala 1
Jukka Kola 2
1 Pellervo Economic Research Institute,
Helsinki, Finland
2 Department of Economics and Management,
University of Helsinki, Finland
Abstract
Most quality properties of food products can be considered as credence characteristics, quality of
which cannot be inferred before the purchase, and sometimes not even after the purchase. Our
objective is to assess how much consumers are willing to pay (WTP) for meat products, of which e.g.
origins and production practices are known, especially with regard to safety issues. Results indicate
that 59 % of Finnish consumers are willing to pay more to get information about safety and quality of
beef products. Consumers are most concerned with diseases caused by food of animal origin.
Keywords: beef, information, credence attributes, willingness to pay
1. Introduction
In recent years the quality and safety of food and ethics of agricultural production have become
increasingly important to European citizens due to the crises which have affected foodstuffs, animal
health and livestock transportation in the European Union. In Finland, there have not been similar,
widely affecting food crises such as BSE or FMD common in many other EU countries. The first, and
this far also the only BSE case was found in Finland in December 2001, and no FMD cases were
detected during the large-scale FMD crises in some other EU countries. In addition to these crises the
introduction of GMOs in agricultural production has also increased consumer concerns and
uncertainty related to foodstuffs. In this kind of situations information is crucial.
This study examines the role of information in the beef supply chain, and the economics of
information constitutes an appropriate theoretical framework for this. Like other markets, the
functioning of the food market suffers from imperfect and asymmetric information. This phenomenon
is at least as current today as it was in the 1970s, when American professors of economics George
Akerlof, Michael Spence and Joseph Stiglitz studied the information problems in the market and laid
the foundations for the economic approach used in this paper. These professors were awarded the
Nobel Prize in Economic Sciences in 2001, which shows that such an approach is still valid and
necessary.
Previous studies shows that consumers desire more and more information about quality and
safety aspects of food. Additional information was desired particularly regarding meat and meat
products (Jarvela 1998a, b). Consumers accept a label of origin as a signal of food safety and quality,
because present supply of quality information is imperfect (Finfood 2000).
There are two parallel developments of information provision in beef supply chain, which will
increase the amount of credence characteristics about beef quality and safety. First, the National
Quality Strategy is launched by all parties involved in foodstuffs production to express the competitive
advantages and strengths of Finnish food products relating to quality, safety, ethics, and ecology. The
exchange of information within foodstuffs production will be systematically collected and stored in a
special data bank. Second, a beef identification and labeling system in the European union was
developed primarily to reassure the safety of beef products and to increase transparency and
traceability of beef products in supply chain. Future developments of this labelling system could