PESTICIDE-RESIDUE RISK AND FOOD SAFETY VALUATION - A RANDOM UTILITY APPROACH

A new approach is developed for integrating consumers' risk perception s with stated purchase behavior when consumption decisions must be mad e with incomplete information. The application involves health risks f rom exposure to pesticide residues on fresh produce. Unlike traditiona l food demand analysis, the present approach treats produce choices as discrete outcomes, resulting in a random utility model. Empirical res ults from a pilot survey suggest a clear linkage between perceptions a nd behavior in response to new risk information. Consumers' stated pre ferences for safer produce were primarily influenced by price differen ces and perceived risks, not by the technical risk information provide d alone. However, the linkage between behavior and valuation was less clear cut. The risk/price tradeoffs entailed by contingent discrete ch oices indicate high price premia for small risk reductions and little variation in price premium across alternative risk reductions.