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Water Quality Violations and Avoidance Behavior: Evidence from Bottled Water Consumption

Author

Listed:
  • Joshua Graff Zivin
  • Matthew Neidell
  • Wolfram Schlenker

Abstract

We examine the impact of poor water quality on avoidance behavior by estimating the change in bottled water purchases in response to drinking water violations. Using data from a national grocery chain matched with water quality violations, we find an increase in bottled water sales of 22 percent from violations due to microorganisms and 17 percent from violations due to elements and chemicals. Back-of-the envelope calculations yield costs of avoidance behavior at roughly $60 million for all nationwide violations in 2005, which likely reflects a significant understatement of the total willingness to pay to eliminate violations.

Suggested Citation

  • 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 448-453, May.
  • Handle: RePEc:aea:aecrev:v:101:y:2011:i:3:p:448-53
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    References listed on IDEAS

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    1. Wolfram Schlenker & Sofia B. Villas-Boas, 2009. "Consumer and Market Responses to Mad Cow Disease," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(4), pages 1140-1152.
    2. Harrington, Winston & Portney, Paul R., 1987. "Valuing the benefits of health and safety regulation," Journal of Urban Economics, Elsevier, vol. 22(1), pages 101-112, July.
    3. Shimshack, Jay P. & Ward, Michael B. & Beatty, Timothy K.M., 2007. "Mercury advisories: Information, education, and fish consumption," Journal of Environmental Economics and Management, Elsevier, vol. 53(2), pages 158-179, March.
    4. Wolfram Schlenker & Sofia B. Villas-Boas, 2009. "Consumer and Market Responses to Mad Cow Disease," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(4), pages 1140-1152.
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    Citations

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    Cited by:

    1. Bruno Lanz & Allan Provins, 2014. "The demand for tap water quality: Survey evidence on water hardness and aesthetic quality," CIES Research Paper series 23-2014, Centre for International Environmental Studies, The Graduate Institute.
    2. Janet Currie & Joshua Graff Zivin & Katherine Meckel & Matthew Neidell & Wolfram Schlenker, 2013. "Something in the water: contaminated drinking water and infant health," Canadian Journal of Economics, Canadian Economics Association, vol. 46(3), pages 791-810, August.
    3. Christopher R. Knittel & Douglas L. Miller & Nicholas J. Sanders, 2016. "Caution, Drivers! Children Present: Traffic, Pollution, and Infant Health," The Review of Economics and Statistics, MIT Press, vol. 98(2), pages 350-366, May.
    4. Shrader, Jeffrey, 2014. "Forecasts and Adaptation," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 170626, Agricultural and Applied Economics Association.
    5. Li, Mengyao & Ferreira, Susana, 2015. "The Impact of Haze on People’s Averting Behavior: Evidence From Online Shopping in China," 2015 Annual Meeting, January 31-February 3, 2015, Atlanta, Georgia 196889, Southern Agricultural Economics Association.
    6. Seo, Misuk & Pape, Andreas Duus, 2011. "Reports of Water Quality Violations induce Consumers to buy Bottled Water," MPRA Paper 28207, University Library of Munich, Germany.
    7. Nicholas J. Sanders, 2012. "Toxic Assets: How the Housing Market Responds to Environmental Information Shocks," Working Papers 128, Department of Economics, College of William and Mary.
    8. Lanz, Bruno & Provins, Allan, 2017. "Using averting expenditures to estimate the demand for public goods: Combining objective and perceived quality," Resource and Energy Economics, Elsevier, vol. 47(C), pages 20-35.
    9. Grooms Katherine K., 2016. "Does Water Quality Improve When a Safe Drinking Water Act Violation Is Issued? A Study of the Effectiveness of the SDWA in California," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 16(1), pages 1-23, January.
    10. Rohlf, Alexander & Römer, Daniel & von Graevenitz, Kathrine, 2014. "The Effect of Emission Information on Housing Prices in Germany," Working Papers 0554, University of Heidelberg, Department of Economics.
    11. Prashant Bharadwaj & Matthew Gibson & Joshua Graff Zivin & Christopher Neilson, 2017. "Gray Matters: Fetal Pollution Exposure and Human Capital Formation," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 4(2), pages 505-542.
    12. Joshua Graff Zivin & Matthew Neidell, 2013. "Environment, Health, and Human Capital," Journal of Economic Literature, American Economic Association, vol. 51(3), pages 689-730, September.
    13. Pape, Andreas Duus & Seo, Misuk, 2015. "Reports of Water Quality Violations Induce Consumers to Buy Bottled Water," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 44(1), April.
    14. repec:eee:indorg:v:55:y:2017:i:c:p:1-24 is not listed on IDEAS
    15. Teevrat Garg & Stuart Hamilton & Jacob Hochard & Evan Plous & John Talbot, 2016. "(Not so) Gently down the stream: river pollution and health in Indonesia," GRI Working Papers 234, Grantham Research Institute on Climate Change and the Environment.
    16. Mu, Quan & Zhang, Junjie, 2014. "Air Pollution and Defensive Expenditures: Evidence from Particulate-Filtering Facemasks," University of California at San Diego, Economics Working Paper Series qt1bz8c9ms, Department of Economics, UC San Diego.
    17. Bernard, Sophie & Hotte, Louis & Winer, Stanley L., 2014. "Democracy, inequality and the environment when citizens can mitigate health consequences of pollution privately or act collectively," European Journal of Political Economy, Elsevier, vol. 34(C), pages 142-156.
    18. Roberto Mosheim, 2014. "Under pressure: community water systems in the United States—a production model with water quality and organization type effects," Journal of Productivity Analysis, Springer, vol. 42(3), pages 277-292, December.
    19. repec:gii:ciesrp:cies_rp_36rev is not listed on IDEAS
    20. repec:spr:envpol:v:20:y:2018:i:2:d:10.1007_s10018-017-0196-3 is not listed on IDEAS

    More about this item

    JEL classification:

    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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