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Price Adjustment and Welfare Changes Under Consumer Loss Aversion: The Impact of HPAI on the Table Eggs Market

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  • Anderson, Andrew
  • Zhang, Yuan
  • Thompson, Jada

Abstract

Between 2022 and 2025, highly pathogenic avian influenza (HPAI) affected more than 130 million commercial table egg laying hens in the United States, causing large and sudden decreases in supply and dramatic price increases. Consumer loss aversion may amplify the welfare impact of sudden price increases. This study evaluates the impact of egg price changes on consumer welfare, comparing loss aversion models with baseline results. Using data from the USDA Food-at-Home Monthly Area Price data, we fit a standard and modified almost ideal demand system (AIDS) to estimate demand elasticities which are used in an equilibrium displacement model. Results show baseline consumer surplus losses of $xxxx and $xxxx for the 2022 and 2025 price spike, respectively. When the modified AIDS model is used, results are consistent with loss aversion, and welfare losses increase by X%. Diagnostic testing shows the loss aversion model has superior performance. This study helps policy makers better understand the true welfare impact of HPAI.

Suggested Citation

  • Anderson, Andrew & Zhang, Yuan & Thompson, Jada, 2025. "Price Adjustment and Welfare Changes Under Consumer Loss Aversion: The Impact of HPAI on the Table Eggs Market," 2025 AAEA & WAEA Joint Annual Meeting, July 27-29, 2025, Denver, CO 360849, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea25:360849
    DOI: 10.22004/ag.econ.360849
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