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Risk Valuation in the Presence of Risky Substitutes: An Application to Demand for Seafood

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  • Huang, Ju-Chin
  • Haab, Timothy C.
  • Whitehead, John C.

Abstract

We attempt to value health risks by combining traditional demand impact analysis with direct elicitation of individuals’ risk perceptions of food safety. We examine the impact of multiple risks of related goods on consumption of a risky good. We argue that the consumption of a risky good depends on both its absolute risk level and its relative risks to other risky goods. Seafood consumption in eastern North Carolina was studied. We elicited, in a survey, individual perceived risks as reference points to derive the economic value of reducing health risk in seafood consumption. Revealed and stated data were combined to trace out demand changes in response to absolute and relative risk reductions. Our results show that seafood consumption is affected by the perceived absolute risk and by the relative risk to poultry and that individuals react to the multiple risks in a nonlinear way, as was suggested by our analytical model.

Suggested Citation

  • Huang, Ju-Chin & Haab, Timothy C. & Whitehead, John C., 2004. "Risk Valuation in the Presence of Risky Substitutes: An Application to Demand for Seafood," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 36(1), pages 1-16, April.
    • Handle: RePEc:ags:joaaec:42938
    DOI: 10.22004/ag.econ.42938
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    Cited by:

    1. John C. Whitehead & O. Ashton Morgan & William L. Huth & Gregory S. Martin & Richard Sjolander, 2012. "Willingness-to-Pay for Oyster Consumption Mortality Risk Reductions," Working Papers 12-07, Department of Economics, Appalachian State University.
    2. Katsuhito Nohara, 2014. "Economic Valuation of the Damage to Tourism Benefits by Eastern Japan Great Earthquake Disaster," ERSA conference papers ersa14p1017, European Regional Science Association.
    3. John C. Whitehead & O. Ashton Morgan & William L. Huth, 2018. "Convergent validity of stated preference methods to estimate willingness-to-pay for seafood traceability: The case of Gulf of Mexico oysters," Economics Bulletin, AccessEcon, vol. 38(1), pages 326-335.
    4. Livanis, Grigorios T. & Moss, Charles B., 2005. "Price Transmission and Food Scares in the U.S. Beef Sector," Working Papers 15662, University of Florida, International Agricultural Trade and Policy Center.
    5. John C. Whitehead & O. Ashton Morgan & William L. Huth & Gregory S. Martin & Richard Sjolander, 2020. "Altruistic and Private Values For Saving Lives With an Oyster Consumption Safety Program," Risk Analysis, John Wiley & Sons, vol. 40(11), pages 2413-2426, November.
    6. Katsuhito Nohara & Masaki Narukawa, 2015. "Measuring lost recreational benefits in Fukushima due to harmful rumors using a Poisson-inverse Gaussian regression?," ERSA conference papers ersa15p344, European Regional Science Association.
    7. John C. Whitehead & Subhrendu K. Pattanayak & George L. Van Houtven & Brett R. Gelso, 2008. "Combining Revealed And Stated Preference Data To Estimate The Nonmarket Value Of Ecological Services: An Assessment Of The State Of The Science," Journal of Economic Surveys, Wiley Blackwell, vol. 22(5), pages 872-908, December.

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    More about this item

    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • Q21 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Demand and Supply; Prices

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