Consumer welfare and GM food labeling: A simulation using an adjusted Kumaraswamy distribution

Li Zhao, Haiying Gu, Chengyan Yue, David Ahlstrom

Research output: Contribution to journalArticlepeer-review

21 Scopus citations

Abstract

Genetically modified (GM) food products and their labeling have become a major policy issue with impassioned public debates. We explore the impact of different labeling regimes on consumer attitudes towards GM products and consumer welfare. Our experimental results illustrate that these consumer attitudes do not follow the Uniform distribution as has often been assumed in the literature but instead fit an adjusted Kumaraswamy distribution. If a Uniform distribution is assumed, the advantage of mandatory labeling would be exaggerated. Using an adjusted Kumaraswamy distribution our simulation results demonstrate that voluntary labeling is superior to mandatory labeling with the higher separation cost, while mandatory labeling is not necessarily better with lower separation cost. Therefore, the governments of China and other countries with similar consumer characteristics should consider voluntary labeling for GM food while encouraging innovations that reduce the price of GM food as well as controlling the opportunistic behavior of its producers so as to enhance the advantage of voluntary labeling.

Original languageEnglish (US)
Pages (from-to)58-70
Number of pages13
JournalFood Policy
Volume42
DOIs
StatePublished - Oct 2013

Bibliographical note

Funding Information:
We acknowledge the financial support from the China National Science Foundation (#70973076 & 71141022) and China scholarship council, the guidance from Professor Qinghua Shi, Professor Zhenyu He and Professor Leng Yu at Shanghai Jiao Tong University, and data support from Dr. Lin Ma at Shanghai Jiao Tong University. We thank Marc Ahlstrom of Burlington County College for his editorial assistance. We appreciate Editor Satoru Shimokawa and the anonymous reviewers for their constructive comments and suggestions. The authors are responsible for any remaining errors of the paper.

Keywords

  • China
  • Consumer welfare
  • Experimental economics
  • Kumaraswamy distribution
  • Mandatory labeling
  • Voluntary labeling

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