Enhanced GM foods: Are consumers ready to pay for the potential benefits of biotechnology?

The present study analyzes and compares willingness to pay estimates for different genetic modifications in a tomato plant. Results suggest that consumers are ready to pay the highest premiums for modifications which increase the tomato flavor or enhance the nutritional value. However, these premiums are still fairly small, reflecting the general difficulty of opening new markets for products that consumers may perceive as not completely safe. INTRODUCTION Literature in the general topic area of consumer response toward genetically modified (GM) crops and foods is becoming increasingly important. Consumer attitude studies have focused on the analysis of consumer response toward current GM products, which, in most cases, offer benefits only to producers. However, genetic modification purposes are changing, and the second generation of GM crops will offer benefits to consumers. The biotech industry hopes that current consumer concerns will be eliminated if this second generation of GM crops reports clear benefits to consumers. In this study, we look at GM products that offer potential improvements over conventional products. The impact of beneficial attributes associated with new food technology has important economic and marketing implications. Therefore, a better understanding of consumer attitudes and behavior toward GM food products is essential for designing new market strategies and information policies in the area of enhanced GM products, which recently are becoming very popular. In general, consumer adoption of new GM products depends on whether the benefits outweigh the potential risks (see Bredahl 2001; Bredahl, Grunert, and Frewer 1998). Bredahl, Grunert, and Frewer (1998) developed different models of consumer behavior toward GM foods. Following these models, we assume that both perceived risks and perceived benefits toward a particular GM product are mixed, and influenced by other general consumer attitudes (which are included via respondents' sociodemographics and ethical attitudes toward GM manipulation). This combination of factors leads to determining the final attitude toward genetic engineering in food production. In our application, this general consumer attitude toward genetic engineering will translate into price premiums that consumers may or may not be willing to pay for GM-enhanced foods. There are several known potential risks associated with GM crops and foods. These include, but are not necessarily limited to, health issues (such as allergenicity, increased toxins, antibiotic resistance, and unknown consequences to humans) and environmental issues (such as effects on nontarget organisms, crop-to-crop cross-pollination, crop-to-weed pollination, and development of pest resistance to insecticides) (Feldmann, Morris, and Hoisington 2000). These potential risks, however, do not always translate into perceived risks by consumers. In the case of biotechnology products, Grobe, Douthitt, and Zepada (1999) show that risk perceptions are significantly affected by consumer sociodemographics, such as age, gender, and education. Alternatively, benefits associated with GM manipulation are also various, depending on the final use or goal of the product. Some of the most common benefits include an increase in nutritional qualities, the reduction of pesticide applications, and increase in shelf life of the product. Few consumer economic studies have looked at the impact of benefit perceptions of GM food on information-seeking or purchasing behavior. This paper will add to the consumer economic literature about GM products in the United States, as a study of willingness to pay (WTP) for beneficial attributes associated with this new type of food technology. This differs from the existing body of research about GM products, as most prior consumer acceptance and demand studies have looked at WTP for non-GM products (see for example, Chern et al. 2003; Moon and Balasubramanian 2003) or willingness to accept compensation to buy them (see Grimsrud et al. …