COLUMBUS — Government regulators could more realistically assess the value of improving food safety if they considered that consumers typically want to avoid getting sick — even if it means they have to pay a little extra for safer food, researchers say.
In the world of food regulation, cost-benefit analyses are a primary tool for assessing the societal benefits of mandating more stringent — and more expensive — processing practices.
Dollar value
In most cases, regulators determine a dollar value associated with pursuing new rules by estimating how many illnesses and deaths the safer processing would prevent.
But a recent study proposes a new way to approach these estimates. Instead of focusing on reducing food-borne illnesses and deaths associated with a specific pathogen, why not ask consumers how valuable food-safety improvements are to them?
The researchers conducted a national survey designed with the help of an economic model that predicts consumer behavior.
The results suggested Americans would be willing to pay about a dollar per person each year, or an estimated $305 million in the aggregate, for a 10 percent reduction in the likelihood that hamburger they buy in the supermarket is contaminated by E. coli, said Brian Roe, ag economist at Ohio State University and co-author of the study.
By comparison, a 2008 USDA analysis estimated the value of eradicating a specific type of E. coli contamination from all food sources would result in a benefit valued at $446 million.
The problem with the federal estimate, Roe says, is total eradication of the most common causes of food-borne illness is virtually impossible because of the exorbitant cost required to achieve such a goal.
The more flexible method of measurement proposed in this study suggests consumers are willing to pay more then expected for an outcome that offers much less than total eradication of pathogens.
“We think what we are measuring is more realistic, as complete eradication is a highly unlikely outcome for any policy,” said Roe.
The study
Roe conducted the study with Mario Teisl of the University of Maine. The researchers say their proposed method takes into account important variables the average cost-benefit analysis doesn’t measure, such as pain, suffering and worry, as well as a food-borne illness that doesn’t do any economic damage to an individual.
Their estimate also accounts for human behavior: Some consumers will opt not to eat what they buy, will overcook it to ensure they kill any pathogens or simply do not get sick even when they eat bad food.
In contrast, current methods of cost-benefit analysis involve translating an improvement in food safety into numbers: specifically, reductions in deaths and illnesses linked to a pathogen.
Costs factored into the assessment might include a co-pay for a visit to the doctor and lost wages, as well as the economic costs associated with death — say, the projected income not earned when a life is cut short.
For example, to reach its $446 million estimate to eradicate E. coli cases the United States Department of Agriculture took the 73,480 cases of contamination that occur each year and assigned a formula-derived dollar amount to those cases to arrive at the benefit figure.
“The projections will estimate how many fewer people will die, how many fewer will get sick and how do we assign benefit values to those improvements in the human condition,” Roe said.
“What we’re saying is, let’s think of a method where we can assign a value to that avoided case as well as one for a person who misses work and pays $20 to go to a doctor.
“To hedge their bets, would people be willing to pay $2 a year, $5 a year, to limit the odds they’re going to get sick from 1 in 100 down to 1 in 1,000? That’s the data you really want.”
The survey
Roe and Teisl analyzed surveys from 3,511 individuals. In the questionnaire, they set up six hypothetical scenarios around the purchase of either a package of hot dogs or a pound of hamburger.
They set prices for the packages — both “status quo” foods and those treated with either ethylene gas processing or electron beam irradiation to reduce contaminants — and then laid out a variety of probabilities that the treated or untreated food packages contained contamination with either E. coli or listeria.
They followed by asking respondents to choose one of three actions: Buy the food treated with the pathogen-reducing technology, buy their usual brand, or stop buying this product altogether.
The results showed that consumers will reach a limit to how much they want to pay to reduce their chances of getting sick.
Spending limit
If the treated product cost only 10 cents more than an untreated package, about 60 percent of respondents said they’d buy the improved product. But when the higher price reached $1.60 more per package, less than a third would opt for the treated product.
The structure of the survey also allowed researchers to see the influence of human behavior and opinions on likely illness outcomes. Among the hypothetical scenarios offered in the survey, aggregate figures for consumer willingness to pay ranged from $40 million for a 10 percent reduction of the likely presence of listeria pathogens in hotdogs to the $305 million for the 10 percent reduction in the likelihood of E. coli contamination in hamburger.
Roe noted, though, these specific numbers are less important than the method used to reach them. He said the model used in this research to construct the hypothetical scenarios could be customized for a variety of different regulatory questions.
“If regulators could become more comfortable with this measurement process, agencies might change the way they conduct their cost-benefit analysis. And that would be an interest of ours, to see if our work and others’ work in this area will eventually change the way people attack these questions.”
