ABSTRACT
Economic theory suggests that individuals should manage the array of risks they face consistently: They should allocate resources to reducing each risk until the implicit price of further marginal reductions exceeds the value of life. The contingent-valuation estimate is based on reported willingness to pay for organic produce and perceived risk as reflected in responses to the questionnaire. The estimated premium/risk index ratios can also be used to estimate bounds on a consumer’s willingness to pay to avoid pesticide residues based on his or her choice between organic and conventional produce. One use of the estimated premium/risk index ratios is to distinguish foods where the cost of risk reduction by switching from conventional to organic produce is small from those where it is large. The foods are ranked in ascending order of the premium/Combined risk index ratio. Each premium/risk index ratio estimates the cost at which an individual can reduce health risks by substituting organic for conventional produce.
