Beyond Health Claims: Risk Perceptions, Institutional Trust, and Price Premium Acceptance for Organic Chicken

HRMARS - This study examines Malaysian consumers’ willingness to pay a price premium for organic chicken, focusing on perceived risks associated with conventionally produced chicken and the importance of credible institutional assurance. Organic chicken is treated as a credence good because consumers cannot directly verify most production attributes at the point of purchase. Data were collected from 205 consumers using a double-bounded dichotomous choice contingent valuation method. Respondents were first offered organic chicken at RM22.50 per kilogram, compared with a conventional chicken reference price of RM9.50 per kilogram. Those who accepted the initial bid were offered RM29.80 per kilogram, while those who rejected it were offered RM15.80 per kilogram. Interval regression was used to estimate the determinants of latent willingness to pay. The results show that 60.0% of respondents accepted the initial bid. Among valid double-bounded responses, 27.0% were willing to pay at least RM29.80 per kilogram, while 68.1% fell within the two intermediate willingness-to-pay intervals. The estimated mean willingness to pay was RM25.19 per kilogram, equivalent to a stated premium of RM15.69 per kilogram above the conventional reference price. Perceiving conventional chicken as harmful significantly increased willingness to pay by approximately RM3.12 per kilogram. Respondents below 20 years had significantly lower willingness to pay than those aged 21–40 years, whereas income, gender, and household size were not significant. The findings indicate that premium acceptance is driven not only by health considerations but also by the perceived value of protection from conventional production risks. Credible certification, traceability, and transparent communication are therefore important for strengthening consumer confidence and supporting the organic chicken market in Malaysia.