food scares, information and markets: are consumers and ... · model s v t 1 - s tocas tic s hift 0...
TRANSCRIPT
Food scares, information and markets:
Are consumers and media rational?
Mario Mazzocchi
Dipartimento di Scienze Statistiche,Università di Bologna
Key elements
• Background:
Food safety, consumers & the market(s)
• Risk perception during quiet times
• Food scares & consumer response
• Does the «market for information» work?
Background
The economics of food safety
Supply
Demand (Willingness-to-Pay)
p*
q*
Three markets
1) The food2) The level of food safety3) Information on food safety
Do markets work?
A few issues with food safety…
Negative externalities:the effects of producing/selling unsafe foods are not reflected by consumer prices
Asymmetric information & moral hazardDo you know the “market for lemons”?
Risk perception (& consumer tradeoffs)
Are consumers rational?
Lichtenstein et al. (1978)
Schmidt (2004)
Consumers & food scares
• “Irrational consumers”?
• Price fall, demand also
• Changes in risk perceptions and attitudes
• Changes in consumption patterns
• Short term → Emotional
• Long term → Structural
• Changes in the demand for food safety information (BSE, traceability…)
Media & social amplification of risk
(Beardsworth and Keil, 1996)
Multiple meat scares & demand
.25
.30
.35
.40
.45
.50
.55
88 90 92 94 96 98 00 02
Beef
BSE1
Dioxin
BSE2
.12
.13
.14
.15
.16
.17
.18
.19
88 90 92 94 96 98 00 02
Chicken
BSE1
Dioxin
BSE2
Mazzocchi et al. (2006)
Oahu milk contamination & news
-5
-4
-3
-2
-1
0
82:04 82:07 82:10 83:01 83:04
Model SVT1 - stocastic shift
0
20
40
60
80
100
120
140
82:04 82:07 82:10 83:01 83:04
Negative media index
0
40
80
120
160
200
240
82:04 82:07 82:10 83:01 83:04
Total media index
There is no such thing as “positive news” after a scare
“No news is good news” (Mazzocchi, 2006)
Impact on consumption of the Oahu (Hawaii) milk contamination, 1982
The market for news
The market for news
The demand driven bias:
• Consumers demand news that confirm their beliefs/expectations
• Media are biased towards confirming beliefs.
• Competition does not guarantees accuracy
• Political heterogeneity vs. pessimistic biases
Mullainathan and Shleifer (2005); Gentzkow and Shapiro (2006)
A complex scheme (conclusions)
