The Organic Food Premium: A Local Assessment in the UK

The present study combines stated and revealed preferences in order to estimate the hypothetical bias of a sample of organic food consumers from Canterbury in the UK. It uses contingent valuation and hedonic pricing to compare stated and revealed preferences and employs the Almost Ideal Demand System to estimate the elasticity of organic products. The results show that the average price premium is fairly large (approximately 10%). They also demonstrate, crucially, that the size of this estimate is encouragingly similar whether a willingness-to-pay or hedonic pricing method is used. The estimated elasticity of organic products is on average above one, suggesting an elastic response to pricing policy in the present sample. Desirable next steps and potential policy applications for future research are also discussed.