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Consumer and market responses to mad-cow disease

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Author Info

  • Schlenker, Wolfram
  • Villas-Boas, Sofia B

    ()
    (University of California, Berkeley. Dept of agricultural and resource economics and policy)

Abstract

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. Copyright 2009, Oxford University Press.

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Bibliographic Info

Paper provided by University of California at Berkeley, Department of Agricultural and Resource Economics and Policy in its series CUDARE Working Paper Series with number 1023.

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Length: 37pages
Date of creation: 2008
Date of revision:
Handle: RePEc:are:cudare:1023

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Related research

Keywords: animal health; consumer behavior; economic analysis; food safety;

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References

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Cited by:
  1. Joshua Graff Zivin & Matthew Neidell & Wolfram Schlenker, 2011. "Water Quality Violations and Avoidance Behavior: Evidence from Bottled Water Consumption," American Economic Review, American Economic Association, vol. 101(3), pages 448-53, May.
  2. Shimshack, Jay P. & Ward, Michael B., 2010. "Mercury advisories and household health trade-offs," MPRA Paper 22584, University Library of Munich, Germany.
  3. repec:ags:jrapmc:122316 is not listed on IDEAS
  4. Oral Capps Jr. & Sergio Colin‐Castillo & Manuel A. Hernandez, 2013. "Do Marketing Margins Change with Food Scares? Examining the Effects of Food Recalls and Disease Outbreaks in the U.S. Red Meat Industry," Agribusiness, John Wiley & Sons, Ltd., vol. 29(4), pages 426-454, 09.
  5. Schnellenbach, Jan, 2012. "Nudges and norms: On the political economy of soft paternalism," European Journal of Political Economy, Elsevier, vol. 28(2), pages 266-277.
  6. Pozo, Veronica F. & Schroeder, Ted C., 2013. "Effects of Meat Recalls on Firms' Stock Prices," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C., Agricultural and Applied Economics Association 151287, Agricultural and Applied Economics Association.
  7. Maria De Paola & Vincenzo Scoppa, 2010. "Consumers’ Reactions To Negative Information On Product Quality: Evidence From Scanner Data," Working Papers 201012, Università della Calabria, Dipartimento di Economia, Statistica e Finanza (Ex Dipartimento di Economia e Statistica).
  8. Youn, Hyungho & Lim, Byung In & Jin, Hyun Joung, 2012. "Differential effects of negative publicity on beef consumption according to household characteristics in South Korea," Health Policy, Elsevier, vol. 106(2), pages 138-148.
  9. Hagerman, Amy D. & Jin, Yanhong H., 2009. "The Buzz In The Pits: Livestock Futures' Response To A Rumor Of Foreign Animal Disease," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin, Agricultural and Applied Economics Association 49493, Agricultural and Applied Economics Association.
  10. Taylor, Mykel R. & Klaiber, H. Allen & Kuchler, Fred, 2013. "Structural Change in U.S. Consumer Response to Food Safety Recalls," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C., Agricultural and Applied Economics Association 149819, Agricultural and Applied Economics Association.
  11. Zhen, Chen, 2009. "Long-Run Effects From Consumer Reaction To The Spread Of Foodborne Pathogens: The Case Of E. Coli Contamination Of Beef At Jack In The Box Restaurants," 2009 Conference, August 16-22, 2009, Beijing, China, International Association of Agricultural Economists 51341, International Association of Agricultural Economists.
  12. Moonsoo Park & Yanhong H. Jin & David A. Bessler, 2008. "The impacts of animal disease crises on the Korean meat market," Agricultural Economics, International Association of Agricultural Economists, vol. 39(2), pages 183-195, 09.
  13. Erdem, Seda & Rigby, Dan, 2011. "Using Best Worst Scaling To Investigate Perceptions Of Control & Concern Over Food And Non-Food Risks," 85th Annual Conference, April 18-20, 2011, Warwick University, Coventry, UK, Agricultural Economics Society 108790, Agricultural Economics Society.
  14. Craig L. Garthwaite, 2012. "You Get a Book! Demand Spillovers, Combative Advertising, and Celebrity Endorsements," NBER Working Papers 17915, National Bureau of Economic Research, Inc.
  15. Mykel R. Taylor, 2009. "Does Food Safety Information Affect Consumers' Decision to Purchase Mean and Poultry? Evidence from U.S. Household Level Data," Working Papers, School of Economic Sciences, Washington State University 2009-11, School of Economic Sciences, Washington State University.
  16. Valentina G. Bruno & Bahattin Buyuksahin & Michel A. Robe, 2013. "The Financialization of Food?," Working Papers 13-39, Bank of Canada.

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