Mediation and moderation in food-choice models: a study on the effects of consumer trust in logo on choice

Abstract

The paper introduces a way to analyse the influence of mediating and moderating variables on willingness to pay in a simple way. Using data on 427 Italian consumers regarding different organic logos, mediation and moderation analysis is applied for the first time in a discrete choice setting. We tested the hypothesis that trust in logo mediates the relationship between the logo and consumer choice for organic labelled food products. Results do not allow rejecting the hypothesis that trust in logo totally mediates the effect of the logo. Therefore, the willingness for organic products could be interpreted as “cost for trust”: the higher the trust the higher the perceived value-for-money. The mediation effect of trust in logo does not vary across points-of-purchase or regions. Our novel approach is susceptible of various applications when analysing choice data and can be extended further.

Keywords:

• willingness-to-pay
• WTP-space models
• Mediation analysis
• Moderation analysis
• Consumer trust
• Labelling
• Organic food

Notes

1 Recently, mediation researchers have criticized the original seminal work of Baron & Kenny [2] and focused more on the estimation of the indirect effect of M on Y [6]. These works criticize the “joint significance” approach of Baron & Kenny on the following grounds: a) its supposed low power in detecting the effect of the mediator variables, b) the fact that the indirect effect is not tested directly but “inferred logically by the outcome of a set of hypothesis tests” [6]. Some of these critiques have been retracted [12] and are not very relevant in our case, since in this paper we focus on the mediation effect (M→Y) and not on the indirect effect (X→M→Y).

2 This is accounted for by a subscript n in the ASCs.

3 For simplicity, in this and the following equations we have removed the subscript n

4 TRUST being a count variable is modelled as frequency data.

5 These, for the unmediated MXL model are: EU 2.27€, CCPB 1.30€, Demeter 1.23€.

6 Kenny, in his mediation website [4], warns that the coefficients should be zero in value, and not simply statistically non-significant, as they were in Baron and Kenny [2], “because trivially small coefficients can be statistically significant with large sample sizes and very large coefficients can be non-significant with small sample sizes”. However, in our choice model the TRUST variable may suffer of endogeneity and this would result in inconsistent (but not inefficient) estimates of b and c’: since the sample size is large, and we have estimates of both the parameters (which are nonsignificant) and of the standard deviations of the parameter distributions (which instead are highly significant), we can be fairly confident in our conclusions regarding complete mediation.

7 “Willingness to spend” in their paper.