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Risk Valuation in the Presence of Risky Substitutes: An Application to Demand for Seafood

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Author Info

  • Huang, Ju-Chin
  • Haab, Timothy C.
  • Whitehead, John C.

Abstract

We attempt to value health risks by combining traditional demand impact analysis with direct elicitation of individuals’ 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 Info

Article provided by Southern Agricultural Economics Association in its journal Journal of Agricultural and Applied Economics.

Volume (Year): 36 (2004)
Issue (Month): 01 (April)
Pages:

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Handle: RePEc:ags:joaaec:42938

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Web page: http://www.saea.org/jaae/jaae.htm
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Related research

Keywords: Absolute and Relative Risks; Food Borne Health Risk; Revealed and Stated Data; Risk Substitutes; D1; D8; I12; Q21;

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References

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  1. Jill J. McCluskey & Gordon C. Rausser, 2001. "Estimation of Perceived Risk and Its Effect on Property Values," Land Economics, University of Wisconsin Press, vol. 77(1), pages 42-55.
  2. Tanya Roberts & Jean C. Buzby & Michael Ollinger, 1996. "Using Benefit and Cost Information to Evaluate a Food Safety Regulation: HACCP for Meat and Poultry," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(5), pages 1297-1301.
  3. Elise Golan & Fred Kuchler, 1999. "Willingness to Pay for Food Safety: Costs and Benefits of Accurate Measures," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(5), pages 1185-1191.
  4. repec:jaa:jagape:v:30:y:1998:i:1:p:69-82 is not listed on IDEAS
  5. Park, Jaehong & Davis, George C., 2000. "The Theory And Econometrics Of Health Information In Cross-Sectional Nutrient Demand Analysis," Faculty Paper Series 24015, Texas A&M University, Department of Agricultural Economics.
  6. Jason F. Shogren & John A. Fox & Dermot J. Hayes & Jutta Roosen, 1999. "Observed Choices for Food Safety in Retail, Survey, and Auction Markets," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(5), pages 1192-1199.
  7. Spencer Henson, 1996. "Consumer Willingness To Pay For Reductions In The Risk Of Food Poisoning In The Uk," Journal of Agricultural Economics, Wiley Blackwell, vol. 47(1-4), pages 403-420.
  8. Fox, John A. & Shogren, Jason F. & Hayes, Dermot J. & Kliebenstein, James B., 1995. "Chapter 06: EXPERIMENTAL AUCTIONS TO MEASURE WILLINGNESS TO PAY FOR FOOD SAFETY," Valuing Food Safety and Nutrition (1995), Regional Research Project NE-165 Private Strategies, Public Policies, and Food System Performance, number 25986.
  9. Henneberry, Shida Rastegari & Piewthongngam, Kullapapruk & Qiang, Han, 1999. "Consumer Food Safety Concerns And Fresh Produce Consumption," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 24(01), July.
  10. Eileen O. van Ravenswaay & John P. Hoehn, 1996. "The Theoretical Benefits of Food Safety Policies: A Total Economic Value Framework," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(5), pages 1291-1296.
  11. Buzby, Jean C. & Fox, John A. & Ready, Richard C. & Crutchfield, Stephen R., 1998. "Measuring Consumer Benefits Of Food Safety Risk Reductions," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 30(01), July.
  12. Cropper, Maureen L., 1995. "Chapter 10: VALUING FOOD SAFETY: WHICH APPROACHES TO USE?," Valuing Food Safety and Nutrition (1995), Regional Research Project NE-165 Private Strategies, Public Policies, and Food System Performance, number 25984.
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Cited by:
  1. Livanis, Grigorios T. & Moss, Charles B., 2005. "Price Transmission and Food Scares in the U.S. Beef Sector," Working Papers 15662, University of Florida, International Agricultural Trade and Policy Center.
  2. John C. Whitehead & Subhrendu K. Pattanayak & George L. Van Houtven & Brett R. Gelso, 2008. "Combining Revealed And Stated Preference Data To Estimate The Nonmarket Value Of Ecological Services: An Assessment Of The State Of The Science," Journal of Economic Surveys, Wiley Blackwell, vol. 22(5), pages 872-908, December.
  3. John C. Whitehead & O. Ashton Morgan & William L. Huth & Gregory S. Martin & Richard Sjolander, 2012. "Willingness-to-Pay for Oyster Consumption Mortality Risk Reductions," Working Papers 12-07, Department of Economics, Appalachian State University.

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