The economic value of food labels: A lab experiment on safer infant milk formula

Enterobacter sakazakii, a pathogen that can be found in powdered infant milk formula, can cause adverse health effects on infants. Using Vickrey auction, this study examines parents' willingness to pay (WTP) for a quality assurance label on powdered infant milk formula. The influence of ambiguity with the incidence rate information and provision of safe-handling information on WTP are also evaluated using three experiments/treatments. The mean price premium parents are willing to pay for the safer and quality assurance labelled powdered infant milk formula ranges from 61 to 133 Eurocents per 100 grams depending on the treatment. While no ambiguity effects are generally found, provision of safe-handling information has a significant influence on WTP. When the safe-handling information was given, WTP for the quality assurance label was significantly reduced and ranged from 39 to 69 Eurocents per 100 grams depending on the treatment. The results suggest that parents significantly value a quality assurance label with or without clear incidence rate information. Parents' valuation of the label, however, is reduced with the provision of safe-handling information.