Effect of consumers time preferences on choice of organic rice in Shiraz

Document Type : Research Paper

Authors

1 Assistant Professor of Agricultural Economics, Darab College of Agriculture and Natural Resources, Shiraz University

2 Master of Agricultural Economics, School of Agriculture, Shiraz University

3 Dept of Agric Econ., Shool of Agric., Shiraz University

Abstract

The aim of this study was to investigate the influence of households’ time preferences on their willingness to pay a price premium for organic rice over conventional rice in Shiraz. A fourteen-item Consideration of Future Consequences (CFC) scale was used to extract consumers time preferences. The consumers' willingness to pay was extracted based on single–bounded dichotomous choice contingent valuation method. The design of the bid price vector and the allocation of the sample between different values of this vector were made based on the criterion of minimizing the variance of willingness to pay applying the Cooper method. The required data were collected in June 2018 by completing 536 questionnaires from Shirazian citizens. Data analysis was performed using the censored normal regression model. Based on the results, the effect of consumers time preferences on their willingness to pay a premium price for organic rice was estimated to be significant and positive, so that they are willing to pay premium to buy organic rice. The interaction of education level and time preferences variables was significantly positive at 1% level. This suggests that by taking into account fixed level of the individuals' time preferences, consumers with a college education are willing to have a higher price premium than those without a college education. Therefore, assuming that university education leads to improve environmental insights, increasing public knowledge to protect the environment through public media with the aim of stimulating demand for organic and pro-environmental products, should be considered by policy makers.

Keywords

References

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