Estimation of a Hedonic Price Equation with instruments for Chicken Meat in the UK: Does the Organic Attribute matter?

Dr Adelina Gschwandtner

Discussion paper KDPE 1911 by Eduardo RibeiroAdelina Gschwandter (University of Kent) and Cesar Revoredo-Giha (SRUC, Edinburgh, UK), December 2019.

Non-technical summary

The consumption of chicken meat has increased significantly worldwide in the last few decades. Increasingly, consumers substitute red meat for chicken meat, which is perceived to be healthier and to have a lower carbon footprint. Organic chicken meat is perceived additionally to have a better taste, to lead to higher animal welfare and to be healthier.

In the present study we estimate the premium that UK consumers are willing to pay for the organic attribute in the case of chicken meat. This is essential at the present time when the UK is exiting the European Union and agricultural policy is likely to be reformed.

We use a comprehensive data set of scanned shopping of UK consumers and employ a methodology that allows us to disentangle precisely the contribution of the organic attribute to the price of chicken meat and to control for potentially omitted variables.

We find that the organic attribute accounts for a much larger proportion of chicken meat value than previously believed. Organic food products provide a series of benefits to consumers involving their direct use and their value to the environment and the society as a whole, and the present paper suggests a way in which these can be estimated more accurately to be better suited for potential policy recommendations.

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