An estimation of the consumer valuation of radiation-contaminated food: A new discrete/continuous choice approach∗

This paper presents a new discrete/continuous choice model as a structural form to estimate a nonlinear function for the consumer valuation of radiationcontaminated milk. Unlike conventional Tobit models, some linear systematic parts of this model have structural interpretations. Using an Internet-based survey of 7,600 respondents, we found that even slightly contaminated milk was never quoted at positive prices by consumers with serious concerns about the exposure of their infants to radiation. However, contaminated milk continued to be evaluated at discounted but positive prices by those regarded as already carrying considerable carcinogenic risks. The latter finding is consistent with prospect theory.