THE PRIVATE RATIONALITY OF BOTTLED WATER DRINKING

I. INTRODUCTION Drinking bottled water has become both increasingly popular and increasingly controversial. Annual U.S. consumption of bottled water tripled from 12 billion bottles in 2000 to 36 billion bottles in 2006 (Container Recycling Institute 2008). Per capita consumption of bottled water in 2010 was 28.3 gallons annually, exceeding the per capita amounts for milk (20.4 gallons), coffee (18.4 gallons), and tea (10.3 gallons), but less than the comparable amount for all sodas (44.7 gallons). (1) Bottled water has come under particular attack because of the perceived irrationality of the consumer choice. Some critics view bottled water as an entirely frivolous consumer good without any desirable product attributes. (2) They claim that those who drink bottled water are victims of hype and that bottled water is not superior on any dimension to tap water and can be riskier than tap water. Moreover, to the extent that bottled water is purified tap water, they suggest that there is often no taste difference. This article examines these critiques and provides an exploration of the private rationality of bottled water drinking. Despite the widespread claims of consumer irrationality in the media and by environmental groups, there has been little empirical attention paid to the assessment of whether there is a potentially sound basis for bottled water consumption. In this instance, as with many other personal consumption decisions and expressions of paternalistic concerns, individual preferences vary and critiques may be a form of second guessing the choices of others based on one's own preferences. However, irrespective of the heterogeneity of individual preferences, such critiques may nevertheless be valid if the consumption choices are driven by misperception of the attributes of the product by consumers. It is the soundness of consumer perceptions and the coherence of individual choice that we examine in this article. Whether consumers properly assess risks and how information affects these risk beliefs is of continuing interest in a variety of consumer choice contexts. Much attention has been devoted to tests of the perception of the risks of smoking, which are analyzed in Viscusi (1990), among others. Information about other less prominent hazards has also been shown to be influential in altering consumer behavior as in the case of consumer responses to mercury advisories for fish (Shimshack, Ward, and Beatty 2007). Our analysis is unique both in its focus on linkages between water quality experiences, risk beliefs, and precautionary behaviors from a nationally representative sample. There are several important antecedents in the literature that address issues that are relevant to the topics addressed here. This research has largely focused on arsenic risks in water, likely stimulated in part by the controversial U.S. Environmental Protection Agency (EPA) regulation reducing allowable arsenic levels in drinking water. (3) For instance, in a mail survey in 30 Minnesota communities with high levels of arsenic contamination in water, residents express adverse individual experiences with taste, color, and odor in the water even though arsenic is tasteless, odorless, and colorless (Cho, Easter, and Konishi 2010). While this result suggests that consumers apparently lack understanding of the determinants of arsenic risks, it also may reflect consumers' belief that sensory water characteristics on these dimensions can provide information with respect to risk components that cannot be readily monitored. After the study provided respondents with information on current and historical information of arsenic levels, only the taste attribute continued to play a significant role as a predictor of assessed arsenic risks (color and odor were no longer influential). The dominant role of taste in governing arsenic risk beliefs is consistent with the leading role that taste considerations play in our respondents' risk beliefs of water quality risks generally as well as their water usage decisions. …