Risk Valuation in the Presence of Risky Substitutes: An Application to Demand for Seafood
AbstractWe attempt to value health risks by combining traditional demand impact analysis with direct elicitation of individualsâ€™ risk perceptions of food safety. We examine the impact of multiple risks of related goods on consumption of a risky good. We argue that the consumption of a risky good depends on both its absolute risk level and its relative risks to other risky goods. Seafood consumption in eastern North Carolina was studied. We elicited, in a survey, individual perceived risks as reference points to derive the economic value of reducing health risk in seafood consumption. Revealed and stated data were combined to trace out demand changes in response to absolute and relative risk reductions. Our results show that seafood consumption is affected by the perceived absolute risk and by the relative risk to poultry and that individuals react to the multiple risks in a nonlinear way, as was suggested by our analytical model.
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Bibliographic InfoArticle provided by Southern Agricultural Economics Association in its journal Journal of Agricultural and Applied Economics.
Volume (Year): 36 (2004)
Issue (Month): 01 (April)
Absolute and Relative Risks; Food Borne Health Risk; Revealed and Stated Data; Risk Substitutes; D1; D8; I12; Q21;
Find related papers by JEL classification:
- D1 - Microeconomics - - Household Behavior
- D8 - Microeconomics - - Information, Knowledge, and Uncertainty
- I12 - Health, Education, and Welfare - - Health - - - Health Production
- Q21 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Demand and Supply (the Commons)
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