Food Quality Verifications and Consumer Trust

Food markets are increasingly characterized by an array of quality assurances with respect to credence attributes, reflecting a growing interest in where food comes from and how it is produced. The provision and signalling of these credence quality attributes includes both public and private sector initiatives. How effective are quality signals in addressing the information asymmetry inherent in credence attributes? To what extent do consumers trust quality assurances from different sources, and does this trust differs across food products or across credence attributes? The paper presents a simple economic welfare analysis of the market for a credence attribute under different assumptions with respect to the strength of consumer preferences, the existence of voluntary versus mandatory standards, and the credibility of third party certification. This is followed by an empirical analysis drawing from two consumer surveys in Canada using discrete choice experiments. Food quality claims related to farm animal welfare in a meat product and to environmental sustainability in a bread product are examined. Latent Class models reveal significant heterogeneity in consumer preferences, both in terms of the value consumers place on farm animal welfare and environmentally sustainable quality assurances, and the extent to which it matters who is verifying these assurances.