Sunday, June 12, 2011

A calibrated auction-conjoint valuation method: Valuing pork and eggs produced under differing animal welfare conditions
Abstract: This paper develops a valuation method which generates consistent and systematic estimates of people's preferences for complex multi-attribute goods by inextricably linking auction bids with conjoint ratings. The advantage of the valuation approach is that it permits the estimation of people's values for many potential goods, allows one to decompose people's values for a good into its sub-components, and permits the study of preference heterogeneity without distributional assumptions. We apply the method to an important and increasingly controversial topic: animal welfare. The method is used to determine people's preferences for eggs and pork produced from different production systems. Data from experiments conducted in three diverse U.S. locations (Chicago, IL; Dallas, TX; and Wilmington, NC) indicates that people are, on average, willing to pay $0.95 more for a dozen eggs raised in an aviary, pasture system vs. a cage system, and are willing to pay $2.02 more for two-pounds of pork chops raised in a pasture system as opposed to a crate system.

by F. Bailey Norwood and Jayson L. Lusk, both of the Department of Agricultural Economics, Oklahoma State University, 411 Ag Hall, Stillwater, OK 74078, USA
Journal of Environmental Economics and Management via Elsevier Science Direct
Volume 62, Issue 1; July, 2011; Pages 80-94
Keywords: Animal welfare; Auction; Conjoint; Discovered preference hypothesis; Willingness-to-pay

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