The purpose of this paper is to examine the effect of health information and sensory attributes on consumer’s propensity to upgrade and their willingness to pay (WTP) for pasteurized milk in Ethiopia.
The authors used a framed market experiment with 160 participants in 14 central locations in urban Ethiopia. The authors used a double hurdle model to analyze consumer willingness to shift to pasteurized milk and their WTP for quality attributes in pasteurized milk.
Consumers are willing to pay a 4 percent premium for quality attributes in pasteurized milk. Male and employed participants are willing to shift and pay a premium for pasteurized milk. Conversely, consumers with more children, higher income, and higher raw milk consumption are less likely to shift to pasteurized milk. These results also show that taste is negatively related to consumer propensity to upgrade to pasteurized milk. Further, about half of the consumers who were provided with health information are willing to pay a premium of 11 percent for pasteurized milk, whereas others would pay only 6 percent. After providing the treatment group with health information, those consumers with higher income, old people and consumers with children are less likely to shift to pasteurized milk. Overall, consumer preference for raw milk is the result of taste, perceived nutrition and perceived health benefits. The study points at a segmented milk market and the consequent need for the provision of a targeted milk market promotion.
The application of experimental auctions in developing countries requires an extensive learning exercise for participants.
The authors used a non-hypothetical valuation mechanism to unravel the effect of subjective and intrinsic milk attributes in fluid milk choice decisions and its variation across socio-economic groups in a developing country context.
