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Consumer willingness -to -pay for flavor in beef steaks: An experimental economics approach

Wendy Jeanne Umberger, University of Nebraska - Lincoln

Abstract

The primary objective of this dissertation was to determine consumers' preferences and willingness-to-pay (WTP) for flavor in beef steaks. Two hundred and forty-eight consumers in Chicago, IL and San Francisco, CA participated in an experimental economics laboratory procedure. A sealed-bid, fourth-price auction was used to measure consumers' WTP for flavor by comparing: (1) highly marbled USDA Choice versus low marbled USDA Select beef, and (2) U.S. corn-fed beef versus Argentine grass-fed beef. The data elicited in these experiments was used to conduct three analyses. ^ The first analysis examined consumers' flavor preferences and WTP for beef steaks. Twenty-nine percent of the consumers were willing-to-pay more for the Choice steak than the Select steak, however, 13.7% of the consumers were willing-to-pay more for the Select steak. Sixty-two percent of the participants were willing-to-pay more for the domestic steak, and 23% of the participants were willing-to-pay more for the Argentine steak. The results did not allow identification of different consumer segments that prefer specific flavors of beef. However, one commodity-type of beef product will not meet the demands of all consumers. ^ The second study expanded upon the taste panel research and examined the relationship between consumers' expected steak quality from visual appraisal, and the quality that is actually experienced by consumers when consuming a steak. On average, consumers were willing-to-pay more for the low marbled Select steak than for the high marbled Choice steak after visual evaluation of the steaks. A discrepancy existed between consumers' visual and taste preferences. Only 7.9% of the participants preferred the same steak in the visual and taste evaluations. ^ The third analysis extended the knowledge and understanding of experimental auctions by exploring the factors influencing both individual demand and market price in a sealed-bid, multi-unit auction. The auction market price was a function of the number of panelists and panelists' tastes and preferences, rather than the “wealth effect.” The experimental auction proved to be a valuable mechanism for measuring consumers' WTP. ^

Subject Area

Agriculture, Food Science and Technology|Economics, General|Economics, Agricultural

Recommended Citation

Umberger, Wendy Jeanne, "Consumer willingness -to -pay for flavor in beef steaks: An experimental economics approach" (2001). ETD collection for University of Nebraska - Lincoln. AAI3000466.
http://digitalcommons.unl.edu/dissertations/AAI3000466

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