Would Subsidizing a Food Pathogen Vaccine Upset the Food Policy Applecart

Vaccines against several common foodborne pathogens are being developed and could substantially alter the policy tools available to address foodborne illness. However, little analysis is available to suggest how social welfare would be affected by these new vaccines. To address this void, we use stated preference data to estimate consumer willingness to pay (WTP) for food safety vaccines and then simulate the welfare impacts on related commodity markets of subsidizing consumer purchases of the vaccine within a partial equilibrium framework. To obtain consumer demand for the vaccine from the stated preference data, we simultaneously estimate model parameters in an econometrically coherent manner that recognizes the recursive nature of responses to questions probing respondents’ willingness to purchase vaccines and perceptions of the probability and severity of possible foodborne illness incidents and the joint distribution of unobservable components. Based on this econometric estimation, we integrate the average proportion of consumers purchasing the vaccine in a partial equilibrium model linked to a particular food product. Our simulation shows that subsidizing the vaccine is likely to lead to a higher welfare than stricter pathogens standards when the marginal cost of public funds is relatively low.