Reference effects in consumer food choice

Abstract

In general, people prefer their current situation, even if they would be better off in another situation. This concept is relevant to public policy aimed at changing food habits into healthier food intake in the population. The increasing prevalence of citizens in industrialized countries being overweight or obese in the last 25 years has direct consequences on development of cardiovascular diseases, diabetes and some cancers (WHO, 2000). This is often caused by an unbalanced energy management which can be attributed to changed patterns of food consumption and a more sedentary lifestyle. Because of their repetitive nature, unhealthy food choices can be characterized as habits. A conscious decision process is therefore less likely to occur and past behaviour is often a strong predictor of current choices (Albarracin & Wyer Jr., 2000; Betsch, Haberstroh, Molter, & Glöckner, 2004; Brug, De Vet, De Nooijer, & Verplanken, 2006). The popularity of unhealthy food products is commonly ascribed to the hedonic aspects of these goods. The intrinsic appeal of hedonic goods might cause difficulties in attempts to change preferences for unhealthy food. This thesis focuses on reference effects to relate unconscious processes to consumer decision making for food products. In an intuitive type of reasoning, a person might be more vulnerable to the use of heuristics and biases in a choice situation (Kahneman, 2003). One of these biases is loss aversion which is explained by Prospect Theory (Kahneman & Tversky, 1979). According to Prospect Theory, the loss of utility associated with giving up a good is perceived as greater than the utility gain associated with receiving the good, causing a preference for one’s current endowments and resulting in consumers who rather stick to their status quo than switch to an alternative (Kahneman, Knetsch, & Thaler, 1990; Kahneman & Tversky, 1979; Knetsch, 1995). A broader perspective on loss aversion or the endowment effect may lead to consumer food habits being considered as a preference for the status quo type of food intake (Samuelson & Zeckhauser, 1988). This may lead to the prevalence of a lifestyle which is then difficult to change. This thesis describes several experiments to understand the impact of reference effects in consumer decision making with respect to hedonic versus utilitarian food products. Two basic consumption effects: (1) consummatory affective (hedonic) gratification from sensory attributes, and (2) instrumental, utilitarian functions or consequences of consumption (Batra & htola, 1991; Dhar & Wertenbroch, 2000; Hirschman & Holbrook, 1982) suggest that some types of food choices might also be more susceptible to loss aversion or status quo effects than other types. In experimental classroom settings, participants (16-18 years old) received either a hedonic or a utilitarian type of food product and made a decision between keeping their endowment or exchanging it for the other type of food. The outcomes of the experiments showed that the endowment effect was significantly stronger for hedonic than for utilitarian food products. Also, the strong influence of the hedonic value difference in the choice of hedonic food products was shown which was consistent with our assumption predicting different endowment effects for the two goods. Basically, there are two different ways in which consumers can make decisions: by reasoning and by using emotions or cues. A few additional experiments focused on the effects of cognitive constraints on food choices. Cognitive constraints tend to reduce consumers’ attention to the food choice process such as in the process of a food habit. The outcomes of two experiments showed that the endowment effect was significantly stronger under cognitive constraint than without constraint, which was consistent with our assumption. In addition, the influence of cognitive constraints on consumer choices was significantly stronger for hedonic than for utilitarian food items. Being forced to rely on a more intuitive type of decision making, in case of distractions, increased the endowment effect of specifically hedonic food products. Although there is some agreement on the influence of gender in different consumer decision domains like verbal or analytic skills, consumption or investments, there is still much unknown about the meaning of gender differences in consumer food choices. Males more often than females use the intuitive mode of processing, whereas females on the other hand, are more likely to use a detailed analytic processing mode (Kempf, Palan, & Laczniak, 1997; Meyers-Levy, 1989; Meyers-Levy & Maheswaran, 1991). Comparisons across the cognitive load conditions showed that girls’ endowment effects, independent of product type and in case of a hedonic good in endowment, were significantly stronger when they experienced cognitive constraints, compared to the unconstrained case. A stronger preference for hedonic goods in the choice condition, in addition to the finding that cognitive constraints did not influence the endowment effects for boys suggests that a heuristic processing style seemed indeed most appropriate for boys’ food choices. Because losses are considered as more painful than the same gain provides pleasure, choice preferences may change subject to whether they are experienced in the loss or gain domain of the value function (Knetsch, 2001). Providing information about positive or negative aspects of choice alternatives may result in a change of the reference point of evaluation resulting in preference reversals and leading to, for example, less strong ‘want’ preferences. In addition, focusing on the alternative instead of the status quo in choice situations may increase the attractiveness of the alternative and consequently lead to preference reversals for both goods (Tversky & Kahneman, 1991). The results of the experiments showed that message framing influenced the status quo bias for a hedonic food product leading to a healthier food choice. When participants were asked to retrieve information about the goods from their own memory, the effect on product choice was relatively strong. Especially preferences to keep a Mars bar in endowment decreased when the focus of attention was on including an apple in one’s consumption pattern. A final study was designed to test the endowment effect on food product bundles to relate endowment effects of single food products to food portfolios and food consumption patterns. The results showed that endowment effects significantly decreased when an extra choice option was introduced to keep one of the two goods and exchange the other item confirming our assumptions. In addition, giving up on only one good required less willpower compared to giving up on two goods. A probit regression analysis showed that when participants indicated that their choice was driven by their emotions and heart, indicating impulsiveness, they were more inclined to keep both goods in endowment, whereas desire for variety did not significantly influence their choice. Although many aspects related to reference effects and consumer food choice are worthwhile to investigate further, the outcomes of this thesis might already be useful in attempts to influence consumers’ unhealthy food choices. Endowment effects may be important in establishing a status quo bias for an unhealthy food consumption pattern. A more intuitive type of reasoning leads to stronger endowment effects for especially hedonic goods. Distractions in everyday life may lead to more intuitive decision processes. Outcomes of several experiments suggested that it might be useful to take unconscious processes such as reference effects into account when changing consumer preferences. In addition it might be interesting to focus on the magnitude of the change. Changing consumer food choices is difficult, but findings presented in this thesis indicated that reference effects might be useful to include in this process.

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