How much will we pay for organic food products, and why?

Rachel Griffith, Lars Nesheim, Mon, 07/14/2008

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How much are households willing to pay for organic products? How does this vary across households? Why are people "going organic"? The authors of CEPR DP6905 look to answer these questions for the UK using data on food purchased for home consumption by over 17,000 households.

They find that the percentage of spending on organic varies significantly across product categories, from 0% on cakes to 13% on coffee beans, with an average of 1.4% across all products covered by the data. Comparing households, they find that around 18% of households never buy organic, while 26% of households spend more than 1% of their budget on organic products and fewer than 2% spend over 10% of their budget.

In aggregate, willingness to pay for organic products in the England in 2004 was at least £114bn, with food quality the main motive, health concerns a close second and environmental concerns lagging far behind.

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URL:  http://www.cepr.org/pubs/new-dps/dplist.asp?dpno=6905.asp

Topics:  Environment

Tags:  food prices, organic

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