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Informational Approaches to Regulation

Author

Listed:
  • Wesley A. Magat
  • W. Kip Viscusi

    () (Vanderbilt University)

Abstract

How does risk labeling information on hazardous household chemicals and pesticides influence consumer behavior? While many studies speculate on the effects of risk information, Magat and Viscusi draw on a series of extensive surveys to assess the likely response. Their set of original studies of household chemicals, energy audits, and food risk labeling establishes guidelines for the design and evaluation of these informational regulations. Their findings also include new estimates of the valuation of nonfatal health risks, the first estimates in the literature of the role of altruism, and an assessment of the influence of irrational responses to risk. Although economists suggest that giving consumers information about potentially hazardous goods is preferable to direct regulation of product content, implementation of information regulation raises a host of issues that need to be addressed. Magat and Viscusi document the cognitive limitations that consumers have in processing information and break new ground by showing how, given this behavior, the informational regulations should be designed. Case studies assess the degree to which different kinds of consumers notice, remember, and heed printed warnings in a range of wordings and formats. They then examine risk valuation, showing how much consumers are willing to pay for increased product safety under various conditions. A concluding chapter synthesizes the results and discusses their implications for regulatory policy.

Suggested Citation

  • Wesley A. Magat & W. Kip Viscusi, 1992. "Informational Approaches to Regulation," MIT Press Books, The MIT Press, edition 1, volume 1, number 026213277x, January.
  • Handle: RePEc:mtp:titles:026213277x
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    Citations

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    Cited by:

    1. Amnon Levy, 2011. "Physiological, Gastronomic and Budgetary Aspects and the Diets of Perfectly and Imperfectly Lifetime-Rational Consumers," Economics Working Papers wp11-13, School of Economics, University of Wollongong, NSW, Australia.
    2. Matsumoto Shigeru, 2004. "Consumers' Responses to Front vs. Back Package GM Labels in Japan," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 2(1), pages 1-25, April.
    3. Hammitt, James K. & Rheinberger, Christoph, 2015. "Dinner with Bayes: On the Revision of Risk Beliefs," TSE Working Papers 15-574, Toulouse School of Economics (TSE).
    4. Collins, J. Michael & Simon, Kosali I. & Tennyson, Sharon, 2013. "Drug withdrawals and the utilization of therapeutic substitutes: The case of Vioxx," Journal of Economic Behavior & Organization, Elsevier, vol. 86(C), pages 148-168.
    5. 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.
    6. Belacin, Gisele, 2008. "Disponibilidad a pagar por atributos de calidad. Un estudio aplicado para el caso de la leche fluida," Nülan. Deposited Documents 635, Universidad Nacional de Mar del Plata, Facultad de Ciencias Económicas y Sociales, Centro de Documentación.
    7. Christine Jolls & Cass R. Sunstein, 2006. "Debiasing through Law," The Journal of Legal Studies, University of Chicago Press, vol. 35(1), pages 199-242, January.
    8. Santiago Guerrero, 2012. "Who is Selling You Chiquilitros of Gasoline? Evidence From a Public Disclosure Policy," Working Papers 2012-04, Banco de México.
    9. Morten Mørkbak & Jonas Nordström, 2009. "The Impact of Information on Consumer Preferences for Different Animal Food Production Methods," Journal of Consumer Policy, Springer, vol. 32(4), pages 313-331, December.
    10. David Weil & Archon Fung & Mary Graham & Elena Fagotto, 2006. "The effectiveness of regulatory disclosure policies," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 25(1), pages 155-181.
    11. Grith Ølykke & Peter Møllgaard, 2016. "What is a service of general economic interest?," European Journal of Law and Economics, Springer, vol. 41(1), pages 205-241, February.
    12. John M. Cobin, 2014. "Rare Coin Grading: A Case of Market-Based Regulation," Cato Journal, Cato Journal, Cato Institute, vol. 34(3), pages 597-630, Fall.
    13. Golan, Elise H. & Kuchler, Fred & Mitchell, Lorraine, 2000. "Economics Of Food Labeling," Agricultural Economics Reports 34069, United States Department of Agriculture, Economic Research Service.
    14. repec:bin:bpeajo:v:24:y:1993:i:1993-1m:p:133-196 is not listed on IDEAS
    15. Cole, Anne & Harris, Jane, 2005. "Rising interest in credence qualities in agricultural products and the role for government," 2005 Conference (49th), February 9-11, 2005, Coff's Harbour, Australia 137828, Australian Agricultural and Resource Economics Society.
    16. Bernard Sinclair-Desgagné, 2000. "Environmental Risk Management and the Business Firm," CIRANO Working Papers 2000s-23, CIRANO.
    17. Bernard Sinclair-Desgagné & Ingrid Peignier & Nathalie de Marcellis-Warin, 2003. "Informational Regulation of Industrial Safety - An Examination of the U.S. "Local Emergency Planning Committees"""," CIRANO Working Papers 2003s-03, CIRANO.
    18. Conceição, Junia Rodrigues & Barros, Alexandre Lahóz Mendonça de, 2006. "A Importância Da Certificação E Da Rastreabilidade Para Garantia De Competitividade No Agronegócio: Conceitos E Proposta De Um Modelo Analítico," 44th Congress, July 23-27, 2006, Fortaleza, Ceará, Brazil 148629, Sociedade Brasileira de Economia, Administracao e Sociologia Rural (SOBER).
    19. Julie A. Caswell & Eliza M. Mojduszka, 1996. "Using Informational Labeling to Influence the Market for Quality in Food Products," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(5), pages 1248-1253.
    20. Tonsor, Glynn T. & Wolf, Christopher A., 2011. "On mandatory labeling of animal welfare attributes," Food Policy, Elsevier, vol. 36(3), pages 430-437, June.
    21. Anthony Ogus, 1998. "Regulatory Appraisal: A Neglected Opportunity for Law and Economics," European Journal of Law and Economics, Springer, vol. 6(1), pages 53-68, July.

    More about this item

    Keywords

    regulation; consumer behavior; health risks;

    JEL classification:

    • D1 - Microeconomics - - Household Behavior

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