Willingness-To-Pay for Pomegranates: Impact of Product and Health Features Using Nonhypothetical Procedures

The use of functional foods by individuals to address health issues has become increasingly common. Pomegranate fruits and other pomegranate products contain phytochemicals, including several antioxidants that may have benefits when consumed as a functional food. The production of pomegranates in the United States is concentrated in California; yet pomegranates can be grown successfully in other regions. The purpose of this study was two-fold: 1) to address the market potential and consumer preferences for pomegranate fruits and other pomegranate products in Texas and 2) to address issues of experimental auction design and estimation in regards to novel products and health benefits of food products. A nonhypothetical experimental procedure was developed that combined preference rankings with a uniform nth-price auction to elicit preferences and willingness-to-pay (WTP) for pomegranate fruit products.

Demographic and behavioral characteristics were collected from a representative sample of subjects in the Bryan-College Station area of Texas. Subjects submitted baseline preference rankings and bids on six pomegranate products and a control fruit product, all with the same retail price. Most participants had never purchased or tasted a pomegranate product. Additional information on the pomegranate products was provided in three forms: tasting information, health and nutrition information, and anti-cancer information. Subjects had the greatest WTP for the control product, followed by the juice product, followed by the ready-to-eat products; the whole pomegranate fruits had the lowest WTP. The preference rankings indicated the same order of preferences for the baseline round, but the ranking of the juice product dropped and the ranking of the ready-to-eat and Texas whole fruits rose when additional information was provided.

Estimations of the WTP were done using random-effects tobit models and mixed linear models on the full bids and individual changes in bids. Unengaged bidders and bid censoring were addressed. Demographic variables were typically not predictors of WTP with the exception of previous purchases of pomegranates and household size. There were differences in WTP across information treatments, with tasting information having a greater effect than either health and nutrition information or anti-cancer information. Providing a reference price also increased WTP. Preference rankings were estimated using a rank-ordered logit and a mixed rank-ordered logit model. There was an interaction effect of each information treatment with the product characteristics, indicating that studies of effects of information treatments on preferences are not generalizable across products. There was divergence in the results for the preference rankings from the results of the experimental auction; preference rankings and bids gave different results for the same products.