Do consumers care how a genetically engineered food was created or who created it?

That's the tile of a new paper I co-authored with Brandon McFadden at University of Florida and Norbert Wilson at Tufts that was just released in a special issue of Food Policy, which is focused on genetically engineered food (aka GMOs).

In some ways, our paper is like three papers smushed into one: we tie several analyses together under one theme.  Here's part of the motivation:

“heterogeneity [in preference] across products or breeding technologies rather than people is important because a “GMO” is not a single thing, but rather represents a class of many possible foods and technologies that could have been created for many different reasons by different innovators. The ever-changing capability to modify genomes in new ways requires asking new questions. Understanding consumer reactions to different GE foods, technologies, and innovators is increasingly important as new technologies such as CRISPR or gene editing have
emerged which avoid transgenic manipulations. Additionally, new start-ups and non-profits have entered the space with new products that differ from those commercialized by large agribusinesses”

In addition to documenting whether concern for GMOs has increased over time (answer: they haven't), we study whether:

“(1) certain kinds of GE foods or plant breeding technologies are more acceptable to consumers, (2) consumers prefer that all biotech applications applied to food be regulated identically, and (3) preferences for GE food depend on the innovator. ”

We find that people are most supportive of regulations that focus on the outcomes from plant breeding rather than focusing on the particulars of which breeding method was used.  We also find that support or opposition to a GMO depends on who created the GMO.  Finally, concerns about the safety of GMOs are related to consumers' perceptions of who benefits from the GMO.  Here's one of the key figures.  

GMO labeling: Text vs. QR codes

“Taken together, these results indicate that respondents were willing to pay a premium for food products with labels that communicate the absence of GM [genetically modified] material relative to GM labels. Furthermore, there was a premium associated with a QR code compared to text communicating the presence of GM. Thus, respondents reacted more negatively to text that communicates the presence of GM relative to a QR code that must be scanned. We should note that we do not know if respondents scanned the QR codes, but it seems unlikely that all respondents did, given the premium associated with the QR code. While this may seem strange, we chose to use an experimental design similar to the purchasing environment for consumers after the establishment of the NBFDS. Finally, comparing these results for the two products reveals that consumers are more sensitive to GM whole foods than GM manufactured foods.”

That's from a new paper I co-authored with Brandon Mcfadden, which was just released by the journal Applied Economic Perspectives and Policy.  The work was motivated by the National Bioengineered Food Disclosure Standard (NBFDS), which was signed into law in last summer and has yet to be implemented.  Under the current wording of the NBFDS, companies may disclose the presence of GMO material by text, symbol, or an electronic digital link like a Quick Response (QR) code. 

To investigate how consumers might respond to these new "contains GMO" labels compared to existing labels indicating absence of GMOs (organic and non-GMO project verified), we conducted a survey of over 1,100 US food consumers.  We asked people how much they were willing to pay for whole and processed foods, and we randomly assigned people to different treatments where the food labels systematically varied.  Here is how willingness-to-pay (WTP) premiums varied for different labels placed on granola bars (the full text has a similar figure for apples).

Aside from treatment 5 (which seems something of an aberration), WTP premiums for organic or non-GMO are higher when GMOs are disclosed via text vs. QR code.  Also note that combined organic and non-GMO labels aren't much different than when either label is used in isolation (I blogged on this result last week).  

Given that mandatory GMO labels are coming, food companies will need to decide how to respond.  Below is a flow chart Brandon put together describingthe options available to food companies who are currently sourcing GMO ingredients.  Hopefully these research results will be useful in deciding which decisions to make.

Are Organic and Non-GMO Labels Substitutes or Complements?

For the first time today, I saw the following label on a packaged food.

In a way, the label seems a little odd.  An organic seal on a product should already convey to consumers that the ingredients came from a process that excluded GMOs.  However, the very presence of the label suggests many consumers may not be aware of this fact.  

I have a paper with Brandon McFadden forthcoming in journal Applied Economic Perspectives and Policy (sorry, I don't yet have a link to the paper on the AEPP's website; I'll pass it along when I get the link and discuss the whole paper in more detail).  In the paper we delve into this issue and others.  Here's part of the motivation.  

“It appears that organic organizations are concerned that consumers perceive non-GM and organic labels to be substitutes. Although many organic food companies supported the general idea of mandatory labeling, now that the policy has passed, organic producers have expressed concern that non-GM verification may be perceived as a substitute for the more expensive and encompassing organic certification. For examples, California Certified Organic Farmers (CCOF) initiated a campaign “Organic is Non-GMO and More” to highlight the differences in the two claims, and the Organic Trade Association (OTA) emphasizes, “Organic = Non-GMO…and so much more!!” Despite these concerns, little is known about the extent to which the two most common non-GM labels, USDA Organic and Non-GMO Project, are demand substitutes or complements. Whether the labels are demand substitutes or complements can be determined, in our context, by investigating whether WTP [willingness-to-pay] is supra- or sub-additive when the labels are combined. If the premium for displaying both labels is less than the sum of individual premiums for each label, then the two labels must be providing some of the same underlying characteristics of value to the consumer and implies the two labels are substitutes. By contrast, if the premium for displaying both labels is greater than the sum of individual premiums, then the two labels are complements and provide more value when provided together. ”

We ultimately find that products with the organic seal and products with the non-GMO verified seal are indeed demand substitutes.  Here's one paragraph related to those results:

“For apples, the results revealed large and statistically significant substitution effects for Non-GMO and USDA Organic labels. In fact, results indicated that the two are almost perfect substitutes as WTP [willingness-to-pay] premiums for apples with both Non-GMO and USDA Organic labels roughly the same as WTP premiums for apples that display only one label. This result is made obvious by the third column of results. The WTP premium for apples with the Non-GMO label only (vs text label) is $0.446, the WTP premium for apples with the organic label only (vs text label) was $0.474, and the WTP premium for apples with both Non-GMO and USDA Organic labels was $0.446+$0.447-$0.461=$0.432, which is actually lower than when either label is present in isolation. ”

Because it is more costly to be organic than non-GMO (since the latter is a subset of the former), it is easy to see why many food companies would want to add the additional label that "Organic is non-GMO and more".

How Votes on GMO Labeling Change Concern for GMOs

At the annual meetings of the Agricultural and Applied Economics Association last week in Chicago, I saw an interesting presentation by Jane Kolodinsky from the University of Vermont.  She utilized some survey data collected in Vermont before and after mandatory labels on GMOs appeared on products in that state to determine whether consumers seeing GMO labels on the shelf led to greater or lower support for GMOs as measured by her surveys.  

I'm not sure if she's ready to make those results public yet, so I won't discuss her findings here (I will note I'm now working with her now to combine some of my survey data with hers to see whether the findings hold up in a larger sample).

Nonetheless, her presentation led me think about some of the survey data I collected over the years as a part of the Food Demand Survey (FooDS) project.  While I don't have enough data from consumers in Vermont to ask the same question Jane did, I do have quite a bit of data from the larger states of Oregon and Colorado, which held public votes on mandatory labeling for GMOs back in December 2014.  

In particular, I can ask the question: did the publicity surrounding the vote initiative on mandatory GMO labeling cause people to become more or less concerned about GMOs in general?

We have some strong anecdotal evidence to suggest that support for GMO labeling fell pretty dramatically in the months leading up to the vote.  For example, here are the results from several polls in California (including one data point my research with Brandon McFadden generated) on support/opposition to mandatory GMO labeling.  The figure below shows support for the policy was high but fell precipitously as the election campaigning began, and as we all know by now, the policy ultimately failed to garner majority support in California.

There is a similar pattern of support for mandatory GMO labeling in other states where the voter initiatives were held.  However, just because public support for a mandatory labeling policy fell as a result of campaign ads, this doesn't necessarily mean people thought GMOs were safer or more acceptable per se.  Indeed, many of the negative campaign ads focused on possible "paydays for lawyers" or inconsistencies in the ways the laws would be implemented, rather than focusing on the underlying technology itself.  

The Food Demand Survey has been conducted nationwide and monthly since May of 2013.  In November of 2014, two states - Colorado and Oregon - held widely publicized votes on mandatory GMO labeling.  These data can be used to calculate a difference-in-difference estimate of the effect of mandatory GMO labeling vote on awareness of GMOs in the news and concern about GMOs as a food safety risk.

The survey asks all respondents, every month, two questions of relevance here.  First, “Overall, how much have you heard or read about each of the following topics in the past two weeks” with response categories: 1=nothing; 2=a little; 3=a moderate amount; 4=quite a bit; 5=a great deal.  Second, we also ask, “How concerned are you that the following pose a health hazard in the food that you eat in the next two weeks” with response categories: 1=very unconcerned; 2= somewhat unconcerned; 3=neither concerned nor unconcerned; 4=somewhat concerned; 5=very concerned.  One of the 16 issues we ask about is "genetically modified food."

These data allow us to calculate a so-called difference-in-difference estimate.  That is - were people in CA and OR more concerned about GMOs than people in the rest of the country (this is the first difference) and how did this gap change during and after all the publicity surrounding the vote (this is the second and third difference)?  The "treated" group are the people in CA and OR while the "control" group consists of people in all other US states.

To analyze these question, I split the data into three time periods - "before" the vote (the months prior to September 2014), during the vote (Sep, Oct, Nov, Dec of 2014 and Jan of 2015) and after the vote (all the months after January 2015).  There were 485 "treated" people in CO and OR before the vote, 172 in these locations during, and 908 in these locations after (out of a total sample size of almost 49,000). 

In terms of awareness, here's what I found. 

Compared to people other parts of the U.S., people in CO and OR indeed reported hearing more about GMOs in the news during the ballot initiative vote than they did before and after (the increase in news awareness during the months surround the vote was statistically significant at the 0.01 level).

But, here's the key question.  Did the vote increase or decrease concern about GMOs as a food safety risk?  Apparently there was no effect.  The graph below shows, as compared to people in other states where there were no votes, there was actually a small increase in concern for GMOs in CO and OR in the months during the vote (however, the increase was not statistically significant, p=0.36), which then fell back down to pre-vote levels after the vote.  

So, despite evidence that the vote initiative on mandatory labeling led to an increase in awareness of GMOs in the news, it did not substantively affect concern about GMOs one way or the other.

Fights over Pigweed

None of this will be new to the farmers out there (indeed, there is already an ongoing lawsuit), but this episode of NPR's Planet Money podcast covers a problem that can arise when one farmer's pesticide winds up killing another farmer's crops.  Here's a summary of the story:

“Farmers are in constant conflict with the weed. Some have turned to a powerful pesticide called Dicamba. Dicamba kills the pigweed, but it also kills the neighbors’ plants, including farmer Mike Wallace’s crops. The conflict was no longer farmer versus weed, but also farmer versus farmer. When his neighbors illegally sprayed the pesticide, Wallace reported it. After harvest, Wallace was shot and killed.”

The story is a powerful lesson about externalities that can arise with herbicide resistant genetically engineered crops (this one is largely negative, but note that GE Bt crops can create positive externalities). Who's to blame in this case?  Monsanto for releasing GE Dicamba-resistant seed before a new version of Dicamba was released? Regulators for their slowness in approving the new Dicamba? Farmers who improperly used and applied the old version of Dicamba?  You'll have to listen and form your own judgement.