Modeling and Testing Consumer Engagement in the U.S. Organic Food Market

This study specifies the types of consumers that participate in the U.S. organic market and investigates their revealed preferences. I propose three theoretical consumer types – indifferent consumers, informed organic food lovers, and uninformed organic food lovers – and conduct cross-sectional and time-trend analyses utilizing organic fruit purchase data compiled by The Neilsen Company. The cross-sectional analysis is estimated with a two-stage Heckman selection model, while the time-trend analysis uses simple descriptive statistics and a differenced OLS regression technique. Households are most likely to participate in the organic fruit market if they have a well-educated white or Asian head, are located in a metropolitan area on the West coast, have higher income, have young children, are married, and are making decisions in the spring, summer, or fall. However, households are estimated to purchase more organic fruit, conditional on participating, if they live in a rural area in regions other than the West coast. Having a higher income, being married, having a child less than six years old, being college-educated, and living in a metropolitan area on the West coast are all associated with more dedication to the organic fruit market over time. Households who increased their organic expenditures from 2011 to 2012 likely lived in metropolitan areas on the West coast. Average per-household contribution to the nationwide increase in organic fruit expenditures from 2011 to 2012 on the extensive and intensive margins is estimated to have been about $7 and $14, respectively. I posit relationships between empirical results and the theoretical consumer types.