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Consumer Welfare and the Loss Induced by Withholding Information: The Case of BSE in Italy

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  • Mario Mazzocchi
  • Gianluca Stefani
  • Spencer J. Henson

Abstract

The paper develops a measure of consumer welfare losses associated with withholding information about a possible link between BSE and vCJD. The Cost of Ignorance (COI) is measured by comparing the utility of the informed choice with the utility of the uninformed choice, under conditions of improved information. Unlike previous work that is largely based on a single equation demand model, the measure is obtained retrieving a cost function from a dynamic Almost Ideal Demand System. The estimated perceived loss for Italian consumers due to delayed information ranges from 12 percent to 54 percent of total meat expenditure, depending on the month assumed to embody correct beliefs about the safety level of beef.

Suggested Citation

  • Mario Mazzocchi & Gianluca Stefani & Spencer J. Henson, 2004. "Consumer Welfare and the Loss Induced by Withholding Information: The Case of BSE in Italy," Journal of Agricultural Economics, Wiley Blackwell, vol. 55(1), pages 41-58, March.
    • Handle: RePEc:bla:jageco:v:55:y:2004:i:1:p:41-58
    DOI: 10.1111/j.1477-9552.2004.tb00078.x
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    References listed on IDEAS

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    1. Rousu, Matthew C. & Huffman, Wallace E. & Shogren, Jason F. & Tegene, Abebayehu, 2002. "The Value Of Verificable Information In A Controversial Market: Evidence From Lab Auctions Of Genetically Modified Food," Working Papers 18212, Iowa State University, Department of Economics.
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    1. Colson, Gregory & Huffman, Wallace E. & Rousu, Matthew C., 2011. "Improving the Nutrient Content of Food through Genetic Modification: Evidence from Experimental Auctions on Consumer Acceptance," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 36(2), pages 1-22, August.
    2. Del Giudice, Teresa & Cavallo, Carla & Vecchio, Riccardo, 2018. "Credence Attributes, Consumers Trust and Sensory Expectations in Modern Food Market: Is there a Need to Redefine their Role?," International Journal on Food System Dynamics, International Center for Management, Communication, and Research, vol. 9(4), August.
    3. Hyun No Kim & Ik-Chang Choi, 2018. "The Economic Impact of Government Policy on Market Prices of Low-Fat Pork in South Korea: A Quasi-Experimental Hedonic Price Approach," Sustainability, MDPI, vol. 10(3), pages 1-16, March.
    4. Colson, Gregory, 2009. "Improving nutrient content through genetic modification: Evidence from experimental auctions on consumer acceptance and willingness to pay for intragenic foods," ISU General Staff Papers 200901010800001872, Iowa State University, Department of Economics.
    5. Irz, Xavier & Mazzocchi, Mario & Réquillart, Vincent & Soler, Louis-Georges, 2015. "Research in Food Economics: past trends and new challenges," Revue d'Etudes en Agriculture et Environnement, Editions NecPlus, vol. 96(01), pages 187-237, March.
    6. Heikkila, Jaakko & Pouta, Eija & Forsman-Hugg, Sari & Makela, Johanna, 2011. "Consumer risk perceptions of zoonotic, chemical and gm risks: the case of poultry purchase intentions in Finland," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114551, European Association of Agricultural Economists.
    7. Shepherd, Jonathan D. & Saghaian, Sayed H., 2008. "Consumer Response to Food Safety Events: An Interaction Between Risk Perception and Trust of Information in the Chicken and Beef Markets," 2008 Annual Meeting, February 2-6, 2008, Dallas, Texas 6822, Southern Agricultural Economics Association.
    8. Lusk, Jayson L., 2016. "From Farm Income to Food Consumption: Valuing USDA Data Products," C-FARE Reports 266593, Council on Food, Agricultural, and Resource Economics (C-FARE).
    9. Luigi Cembalo & Daniela Caso & Valentina Carfora & Francesco Caracciolo & Alessia Lombardi & Gianni Cicia, 2019. "The “Land of Fires” Toxic Waste Scandal and Its Effect on Consumer Food Choices," IJERPH, MDPI, vol. 16(1), pages 1-14, January.
    10. Rosa Ferrer & Helena Perrone, 2017. "Consumers’ Costly Responses to Product-Harm Crises," Working Papers 975, Barcelona School of Economics.
    11. Radwan, Amr & Gil, Jose Maria & Ben Kaabia, Monia & Serra, Teresa, 2008. "Modeling The Impact Of Food Safety Information On Meat Demand In Spain," 107th Seminar, January 30-February 1, 2008, Sevilla, Spain 6672, European Association of Agricultural Economists.
    12. Jaakko Heikkilä & Eija Pouta & Sari Forsman-Hugg & Johanna Mäkelä, 2013. "Heterogeneous Risk Perceptions: The Case of Poultry Meat Purchase Intentions in Finland," IJERPH, MDPI, vol. 10(10), pages 1-19, October.
    13. Heikkila, Jaakko & Pouta, Eija & Forsman-Hugg, Sari & Makela, Johanna, 2010. "Consumer Intentions Of Buying Poultry Meat Under Perceived Biological, Chemical Or Technological Risk In Finland," 115th Joint EAAE/AAEA Seminar, September 15-17, 2010, Freising-Weihenstephan, Germany 116403, European Association of Agricultural Economists.
    14. Dedah, Cheikhna O. & Keithly, Walter R., Jr. & Diop, Hamady & Kazmierczak, Richard F., Jr., 2007. "An Inverse Almost Ideal Demand System for Oysters in the United States: An Empirical Investigation of the Impacts of Mandatory Labels," 2007 Annual Meeting, February 4-7, 2007, Mobile, Alabama 34957, Southern Agricultural Economics Association.
    15. Resende Filho, Moises de Andrade & Buhr, Brian L., 2008. "Sobre O Valor Econômico Do Sistema De Identificação Animal Dos Eua (Nais): Notícias A Respeito Do Mau Da Vaca Louca Afetam O Consumo De Carnes?," 46th Congress, July 20-23, 2008, Rio Branco, Acre, Brazil 112719, Sociedade Brasileira de Economia, Administracao e Sociologia Rural (SOBER).
    16. Iimi, Atsushi, 2007. "Infrastructure and trade preferences for the livestock sector : empirical evidence from the beef industry in Africa," Policy Research Working Paper Series 4201, The World Bank.

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