LEEP Seminar series - Jayson Lusk - Purdue University - A Basket-Based Choice Experiment

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Biography

Prof. Jayson Lusk currently serves as Distinguished Professor and Head of the Agricultural Economics Department at Purdue University. He’s a food and agricultural economist who studies what we eat and why we eat it. Since 2000, he has published more than 240 articles in peer-reviewed scientific journals on a wide assortment of topics ranging from the economics of animal welfare to consumer preferences for genetically modified food to the impacts of new technologies and policies on livestock and meat markets to analyzing the merits of new survey and experimental approaches eliciting consumer preferences. In 2011, Prof. Lusk served as a visiting researcher at the French National Institute for Agricultural Research and worked on a research fellowship awarded by the Organization of Economic Cooperation and Development. He’s served on the editorial councils of eight academic journals including the American Journal of Agricultural Economics, the Journal of Environmental Economics and Management, and Food Policy and consulted for various non-profits, government agencies, and agribusinesses.  He has also been elected to and served on the executive committees of the three largest U.S. agricultural economics associations. He is a fellow and past president of the Agricultural and Applied Economics Association.

Abstract

Despite their popularity and wide use, a key drawback of choice experiments is that they rely on consumers making a single discrete choice. However, consumers routinely select multiple food items simultaneously when shopping. This study introduces a novel approach – a basket-based choice experiment – where consumers select their preferred food item or combination of food items. Our basket-based choice experiment includes 21 possible foods that can be used to construct over 2 million possible baskets. Our results show that when given the opportunity, consumers select multiple items for their basket, most commonly three or four items. A composite conditional likelihood function approach is used to reduce the computational burden associated with modeling the choice of over 2 million possible baskets, and estimates are utilized in a multivariate logit (MVL) model to calculate the probability of bundle selection and individual food price elasticities. Unlike typical choice experiments utilizing variants of the multinomial logit model, which forces products to be demand substitutes, our basket-based approach is able to capture a rich set of substitution and complementary patterns, and we find that most of the 21 food items studied are demand complements.