CONSUMER ACCEPTANCE OF GENETICALLY MODIFIED FOODS

Uij = u (yj, Zj, εij)
where i is the dichotomous choice (1 as the preferred state and 0 the status quo) and j refers to
respondent. The determinants of utility are yj, the jth respondent’s income, Zj, a vector of
respondent characteristics and attributes of the choice, and εij, a component of preferences known
to the individual respondent but not observed by the researcher.

Based on this model, respondent j chooses the non-GM food if the utility of non-GM
food exceeds the utility of the status quo (GM food), given prices:

Uij(Zj, y_j - Pngm_j,1, εij) > Uoj (Zj, y_j — Pgmj, 0, sj                         (2)

where 1 denotes the respondent j choosing the non-GM food, 0 denotes the respondent j
choosing the status quo (GM food), Pngmj is the price of non-GM food, Pgmj is the price of GM
food. All other variables were defined previously.

Therefore, the probability that the respondent thinks he/she is better off by choosing the
non-GM food, given its price can be expressed as:

Prob (Respondent j chooses non-GM food)

= Prob [Uij(Zj, yj — Pngm_j,1, ɛɪj) > Uoj (Zj, yj — Pgmj,0, ɛoj)]                            (3)

The Logistic Model

With a further assumption of the linear form for the utility function, the utility of
respondent j choosing the non-GM food can be specified as:

U1j = α1Zj + β1 (Yj - Pngmj) + ε1j                                            (4)

And the utility of respondent j choosing the GM food is:

U0j = α0Zj + β0 (Yj - Pgmj) + ε0j                                              (5)

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