Measuring welfare effects of product contamination with consumer uncertainty

Foster, William; Just, Richard E.

doi:10.1016/0095-0696(89)90020-x

Cited by 130 publications

(107 citation statements)

References 9 publications

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“…Consider public concern over chemical residues in fruits and vegetables, genetically modified foods, "sweat-shop" production ofclothing, dolphin-free tuna, etc . These attributes affect purchase decisions for market goods (Foster and Just 1989;Teisl, Roe, and Hicks 2002) and there is no reason why there should not be similar types of provisionmethod effects in responses to contingent valuation questions. Pesticide residues and genetic modifications carry information on the quality ofthe food products.…”

Section: Explain the Methods Of Provisionmentioning

confidence: 97%

Contingent Valuation in Practice

Boyle

2003

The Economics of Non-Market Goods and Resources

186

105

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Section: Explain the Methods Of Provisionmentioning

confidence: 97%

Contingent Valuation in Practice

Boyle

2003

The Economics of Non-Market Goods and Resources

186

105

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“…The warning in the Oprah Winfrey show led to an initial reduction of more than half the size of the one following the actual outbreak, yet futures prices recovered more quickly in response to the 1996 event than in response to the 2003 event. 17 As Foster and Just (1989) have pointed out, there is evidence that exaggerating the potential threat level can lead consumers to temporarily restrict their purchasing decisions. Such scares will induce welfare losses as consumers deviate from their first-best consumption patterns based on speculative threats.…”

Section: Analysis Of Daily Cattle Futures Pricesmentioning

confidence: 99%

“…For example, Smith, van Ravenswaay, and Thompson (1988) analyze the impact of an incident involving contamination of milk with heptachlor in Hawaii during 1982 and find that negative media coverage has a larger impact than positive coverage. Foster and Just (1989) use the same event to construct a model that examines the welfare losses associated from withholding safety information, as well as losses due to artificially exaggerating the true nature of the threat. The latter arises as consumers respond not only to an actual food crisis, but also to information about the potential risk associated with consuming various products.…”

Section: Background and Motivationmentioning

confidence: 99%

Consumer and Market Responses to Mad Cow Disease

Schlenker

Villas-Boas

2009

American J Agri Economics

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We examine how consumers and financial markets in the United States reacted to two health warnings about mad cow disease: the first discovery of an infected cow in December 2003 and an Oprah Winfrey show that aired seven years earlier on the potentially harmful effects of mad cow disease. We find a pronounced and significant reduction in beef sales following the first discovery of an infected cow in a product-level scanner data set of a national grocery chain. Cattle futures show a pattern of abnormal price drops comparable to the scanner data. Contracts with longer maturity show smaller drops, suggesting that the market anticipated the impact to be transitory. Cattle futures show abnormal price drops after the Oprah Winfrey show, that are, more than 50% of the drop following the 2003 discovery of an infected cow.

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“…Incidents of chemical and bacterial contamination of food receive great attention (Foster and Just, 1989). Perceived product quality after an adverse event plays an important role in consumer's consumption decision (Swartz and Strand, 1981).…”

Section: Offsetting Behavior and Food-safety Informationmentioning

confidence: 99%

Offsetting behavior and the benefits of food safety policies in vegetable preparation and consumption

2010

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Outbreaks of foodborne illnesses have an effect on the development of public health policy. Due to safety‐related uncertainties in the food supply chain, various regulatory safety and health policies are implemented to decrease potential harm to likely victims. The expected effect of these food‐safety policies forecasted in terms of reduction in foodborne illnesses, mortality, and food‐related diseases may be overstated if consumers' offsetting behavior is overlooked. Reduction and, in some cases, reversal of direct policy effect may occur. This research tests the presence of dominant or partial offsetting behavior in the preparation and consumption of vegetables if a food‐safety policy such as the Pathogen Reduction/Hazard Analysis and Critical Control Point (PR/HACCP) is mandated in the vegetable sector. Experimental results indicate the presence of dominant offsetting behavior in response to mandatory introduction of PR/HACCP in the vegetable sector. © 2010 Wiley Periodicals, Inc.

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Measuring welfare effects of product contamination with consumer uncertainty

Cited by 130 publications

References 9 publications

Contingent Valuation in Practice

Contingent Valuation in Practice

Consumer and Market Responses to Mad Cow Disease

Offsetting behavior and the benefits of food safety policies in vegetable preparation and consumption

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