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Estimating the Consumer Expenditure under COOL

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  • Yeboah, Osei
  • Naanwaab, Cephas B.
  • Antwi, Johnson

Abstract

Country of Origin Labeling (COOL) is a labeling procedure, passed in the 2008 Farm Bill by the United States Congress requiring all food products to be labeled by their country of origin. According to Brester et al. (2005), COOL will generate an additional cost of 1.24% and 3.41% for US beef and pork consumers, respectively, which will affect their expenditure patterns. This paper seeks to analyze the effect of COOL induced expenditures on US beef and pork products. A system of linear expenditure functions are developed and used to estimate the own price and cross price elasticities as well as the income elasticities. Consumer expenditure (retail quantities and prices) on each product is regressed on per capita GDP and consumer expenditure on a related product such as chicken using quarterly data from 2004 to 2008 to represent pre COOL; and 2009 to 2013 constituting post COOL. The” pre’’ and “post” COOL estimated elasticities are compared. The estimated coefficients were all statistically significant both before and after the implementation of COOL. Generally, consumer expenditure on beef and pork after the implementation of COOL decreased while the consumer expenditure on chicken increased.

Suggested Citation

  • Yeboah, Osei & Naanwaab, Cephas B. & Antwi, Johnson, 2015. "Estimating the Consumer Expenditure under COOL," 2015 Annual Meeting, January 31-February 3, 2015, Atlanta, Georgia 196851, Southern Agricultural Economics Association.
    • Handle: RePEc:ags:saea15:196851
    DOI: 10.22004/ag.econ.196851
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    1. Schupp, Alvin R. & Gillespie, Jeffrey M., 2001. "Consumer Attitudes Toward Potential Country-Of-Origin Labeling Of Fresh Or Frozen Beef," Journal of Food Distribution Research, Food Distribution Research Society, vol. 32(3), pages 1-11, November.
    2. Schupp, Alvin & Gillespie, Jeffrey, 2001. "Handler Reactions to Potential Compulsory Country-of-Origin Labeling of Fresh or Frozen Beef," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 33(1), pages 161-171, April.
    3. Kwamena K. Quagrainie & James Unterschultz & Michele Veeman, 1998. "Effects of Product Origin and Selected Demographics on Consumer Choice of Red Meats," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 46(2), pages 201-219, July.
    4. Jutta Roosen & Jayson L. Lusk & John A. Fox, 2003. "Consumer demand for and attitudes toward alternative beef labeling strategies in France, Germany, and the UK," Agribusiness, John Wiley & Sons, Ltd., vol. 19(1), pages 77-90.
    5. 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.
    6. Brester, Gary W. & Smith, Vincent H., 2000. "Beef at the Border: Here's the Beef," Choices: The Magazine of Food, Farm, and Resource Issues, Agricultural and Applied Economics Association, vol. 15(2), pages 1-5.
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