Disentangling Purchasing Motives from Socio-demographic Differences: The Case of Organic Milk

Using a unique data set where an unbalanced panel of more than 1,000 households have reported their purchases of groceries in great detail over a period of six months it is shown that consumption of organic milk increases significantly with level of education, urbanisation and income. Age and presence of children in the household have no significant effects. Combining the purchase data with a questionnaire about attitudes towards organic production issued to the same panel shows that 51 per cent believes that organic production has a positive effect on the environment and 41 per cent believes in a positive effect on their own health. The level of trust in organic products generally increases with level of education, urbanisation and income. Including perception of organic goods in the estimation therefore reduces the effects of these socio-demographics, and thereby demonstrates the strength of this type of data combination. * I thank GfK Denmark for providing the purchase and background data, and for issuing the questionnaire. I thank Kenneth Train, David Revelt and Paul Ruud for making their MMNL software available at Train’s MMNL homepage: elsa.berkeley.edu/Software/abstracts/train0296.html (verified 11 June 2008), and I especially thank Kenneth Train for fast and clarifying answers to my questions. The research was funded by The Danish Social Science Research Council (‘FSE’). † Contact information: Laura Mørch Andersen, FOI, Institute of Food and Resource Economics, University of Copenhagen, Rolighedsvej 25, DK-1958 Frederiksberg C, Copenhagen, Denmark, www.foi.dk e-mail: [email protected] FOI Working Paper 2010/5 2 It turns out that both trusts in effect on environment and on health increases the probability of choosing organic milk significantly. The effect of trust in health is more than twice as big as the effect of trust in environment.