Measuring the value of plastic and reusable grocery bags

Abstract

Using data from an online survey of grocery store customers in Logan, Utah, we estimate willingness to pay (WTP) for continued use of plastic grocery bags, and willingness to accept (WTA) for switching to reusable grocery bags. We find evidence to suggest that, on average, individuals have a greater aversion to plastic-bag taxes than an affinity for reusable-bag subsidies. All else equal, older and lower-to-middle-income individuals, as well as larger-sized households, are more likely to switch to using reusable bags exclusively when faced with a tax on plastic bags. Lower-to-middle-income individuals, as well as women in general, are more likely to switch away from using plastic bags when provided with a subsidy for reusable bags. Our results help quantify the extent to which plastic-bag taxation and reusable-bag subsidisation might induce shoppers to switch from plastic to reusable bags for their grocery trips.

Keywords:

• plastic grocery bags
• willingness to pay
• willingness to accept

• JEL codes: Q24, Q51, Q53

Acknowledgements

The authors express their appreciation to an anonymous journal reviewer and their colleagues in the Department of Applied Economics, Utah State University, for helpful comments on earlier drafts of the paper. Any remaining errors are of course the authors' responsibility.

Notes

1. These estimates are based on a highly cited but to-date unobtainable 2001 report by the US Environmental Protection Agency (EPA).

2. Henceforth, the ‘$’ symbol refers to US dollars.

3. To our knowledge, Akullian et al. (2006) provide the only empirical estimate of the external cost attributable to plastic shopping bags. Reuseit.com (2012b) provides a nice outline of the various components of this cost.

4. For example, in Austin (TX) officials recognised that educating residents about the negative environmental consequences associated with using plastic and paper grocery bags would not be sufficient to curb consumer demand. The officials therefore decided to couple an education campaign with a ban on plastic and paper grocery bags and distribution of free reusable bags in lower-income areas of the city (Lisheron 2012). Similar approaches have been used in Tucson (AZ) (Kelly 2013). For a concise summary of specific policies and programmes implemented across the USA, see NCLS (2013).

5. Because grocery stores in our study area (as with most areas worldwide) provide shoppers with free plastic bags, we are precluded from assessing the shoppers’ revealed preferences for these bags.

6. Cities are not the only entities implementing plastic bag bans and taxes in the USA. Retail giants Trader Joe's and Whole Foods Market have banned the use of plastic bags in their outlets, while Ikea charges $0.05 per plastic bag (Horovitz 2008). It is important to note that typically not all forms of plastic bags are banned under a plastic-bag ordinance. For example, San Francisco's ordinance does not apply to fresh produce bags, bags handed out at the meat counter, or bags for prescription medications (Save The Bay 2013).

7. We thank an anonymous referee for pointing out that Australia also has multiple plastic-bag bans in place.

8. Dikgang, Leiman, and Visser (2011) point out that the initial 80% reduction achieved in South Africa dwindled considerably within a year. Dikgang and Visser (2012) note that a similar tax levied in Botswana had a longer-lasting effect than that experienced in South Africa because Botswana's initial tax was set at a higher rate, and then maintained for a longer period of time. We thank an anonymous referee for alerting us to these two articles.

9. Subsidisation of the purchase price of reusable grocery bags is common throughout the USA (Ebencamp and Hein 2008); however, statistics on the extent to which subsidisation occurs at check-out in the USA (e.g. small subsidies of the order of a few cents per bag) are currently unknown.

10. In reality, our notion of a ‘complete shift’ from plastic to reusable grocery bags must of course be tempered by the fact that from time to time even the most resourceful individuals forget to bring their reusable bags on shopping trips.

11. We acknowledge that provision of reusable bags free-of-charge is a counterfactual situation used in this study solely for the purpose of avoiding the introduction of any possible confounding effects on the measurement of an individual's WTA for switching to reusable bags. In reality, individuals are typically required to purchase their reusable bags.

12. Links to two Internet sites are also provided regarding (1) Washington, D.C.'s experience with its plastic bag tax and (2) the pros and cons associated with using reusable vs. plastic grocery bags. Respondents voluntarily chose whether to follow one or both of the links.

13. This response rate is roughly half the average rate reported by Cook, Heath, and Thompson (2000) based on their meta-analysis of a wide range of web-based surveys. According to Lindhjem and Navrud (2011b), response rates for online, stated preference (SP) surveys tend to be more variable than those for online surveys in general. For instance, the authors cite several published studies based on web-based SP surveys with response rates as low as 5% and as high as 40%. Our response rate is admittedly on the lower end of this interval. Lindhjem and Navrud (2011) also find that stated preferences obtained via an internet-based survey are not significantly different or biased in comparison with face-to-face interviews. Therefore, to the extent that the sample size, survey method, and response rate in general correlate with the generalisability of a given survey's results, the broader representativeness of our findings should be weighed accordingly. For example, our relatively low response rate may reflect an oversampling of shoppers who are more interested than average in grocery bag choices, or who feel more strongly about government or retailer taxes and bans in general.

14. We refer only to WTP in our discussion of the interval regression model for expository convenience. The same model is used for calculating the mean WTA, with the subsidy s_j duly substituted for the tax t_j.

15. Because bid values for WTA regressions were found to be weakly significant, we estimated Krinsky and Robb (1986) mean WTA estimates and found these estimates to be negative and insignificantly different from zero.

16. Of the 216 completed surveys, 17 included ‘unsure’ responses to WTP and WTA questions. These observations were removed from the sample for the estimation of the dichotomous-choice model (i.e. Equation 3), but included in the sample for the estimation of the ordered-probit model (see note 19 below). An additional 36 surveys were deemed sufficiently incomplete and also removed from the samples for both the dichotomous-choice and ordered-probit models.

17. In cases where a respondent knows, or believes, s/he is already receiving a subsidy from the grocery store for using reusable bags, the subsidy described in this study can be thought of as being in addition to the pre-existing one. Interestingly, although approximately 100% of the respondents in our sample indicate that using reusable bags for grocery shopping is possible, only 62% report having ever used a reusable shopping bag. Only 6% and 29%, respectively, report using reusable bags all the time or half the time, where ‘all’ effectively includes the few exceptions when the respondent did not have a reusable bag(s) available. We unfortunately did not question respondents about whether, and to what extent, they reuse plastic grocery bags in the household, e.g. as garbage bin liners.

18. We did not include any controls in our study to detect protest responses among respondents who were asked whether they would continue using plastic grocery bags in the face of a tax. As pointed out by Jorgensen et al. (1999, 133), ‘in practice there does not appear to be any agreement over what constitutes a protest response, let alone a comprehensive rationale’. Jorgensen and Syme (1995) echo this sentiment, and Halstead, Luloff, and Stevens (1992) argue that censoring protest bids likely biases aggregate willingness to pay estimates in unpredictable ways.

19. For this model, 17 respondents who answered ‘unsure’ to WTP question were removed from the sample. However, an ordered-probit model was estimated with these 17 respondents included to compare results, where accept_WTP = 0 indicates a ‘no’ response, accept_WTP = 1 indicates an ‘unsure’ response, and accept_WTP = 2 indicates a ‘yes’ response (an ordered-probit model was similarly estimated for WTA model). The results from these respective ordered-probit models, which are qualitatively similar to those for WTP and WTA estimated via Equation (3), are provided in Appendix D. Stata IC/11.0 for Windows (32 bit) was used to derive all statistical results reported in this section.

20. Additional versions of WTP model (and of WTA model presented in Table 4) were run with various variables listed in Table 1. Results from these model runs are available upon request from the authors. The results presented in Table 3 are generated from what the authors believe to be the best-fitting model.

21. These estimates are derived following Kriström (1990) and Boman, Bostedt, and Kriström (1999). The ‘Turnbull’ command in Stata was used to obtain them. See Haab and McConnell (2002) for further details on the Turnbull estimator.

22. See Appendix C for further discussion on the proxy role of rbfree_j = 0.