In this paper, we document a violation of normative and descriptive models of decision making under risk. In contrast to uncertainty effects found by Gneezy, List and Wu (2006), some subjects in our experiments valued lotteries more than the best possible outcome. We show that the overbidding effect is more strongly related to individuals’ competitiveness traits than comprehension of the lottery’s payoff mechanism.

In October 2015, the International Agency for Research on Cancer (IARC) released a report classifying processed meat as a type 1 carcinogen. The report prompted headlines and attracted immediate public attention, but the economic impacts remain unknown. In this paper, we investigate the impacts of the IARC report on selected processed meat prices and purchases using retail scanner data from US grocery stores. We compare changes in prices and sales of selected processed meat products to a constructed synthetic control group (using a convex combination of nonmeat food products). We find a significant decrease in bacon prices in the wake of the IARC report release, but we find no evidence of a sales reduction. We find no significant changes in price and sales for ham and sausage. The pattern of price and quantity changes are consistent with downward shifts in demand and outward shifts in supply for bacon and sausage following the release of the IARC report.

This study explores the effects of consumers’ beliefs about labels on chicken. We elicit beliefs associated with seven different labels. By varying the presence/absence of labels in a choice experiment, we are able to determine the effects of labels on consumer choices and decompose the value of labels into beliefs and base utility. Health perceptions have the largest positive effect, and impacts of animal welfare vary by information treatment. We explore the convergent validity of our approach by comparing individual’s beliefs to responses to a best-worst scaling question, which were weakly correlated, suggesting the two approaches are measuring different constructs.

Understanding how farm household consumption responds to adverse income shocks can provide insight into household well-being and appropriate agricultural policy. Using a split-sample survey of Indiana specialty producers, where we randomly assign respondents to treatments that vary the size of a hypothetical income shock, we estimate the relationship between income loss and household consumption. Given that postdisaster producers' risk preferences are important for business decisions, we elicit producers' risk preferences. We find that food and miscellaneous expenses are the most sensitive to income losses. We also find evidence for decreasing absolute risk aversion among producers after the income loss shock.

This research seeks to determine effects of rising interest in gluten-free foods on U.S. retail food demand and, ultimately, producer and consumer welfare. Increased gluten-free interest led to a modest reduction in cereals and bakery demand and increases in meat, alcoholic beverages, and food away from home demand. Combining estimated effects with an equilibrium displacement model suggests the reduction in cereal and bakery demand decreases wheat and barley producer profits by US$7.2 million/year. After accounting for positive demand impacts on other products, results indicate wheat and barley supply is redistributed away from food production into animal production, increasing wheat producer welfare.

This study tests the prevalence of choice overload (CO) in the U.S. beer market. We reveal that even if CO exists, sellers have mechanisms to reduce CO's negative consequences. The article describes the implementation of search cost-reducing private nudges (i.e., product quality scores and prominently listed specials) sellers commonly utilize to minimize CO's negative consequences. Our results suggest that, while CO exists for some buyers, it can be eliminated by market interactions on the part of the seller. (JEL Classifications: C93, D03, Q13)

Consumers implicitly incorporate their perceptions of products into their decision processes, yet little research has explicitly focused on how those perceptions influence demand for meat. This study incorporates taste, health, and safety perceptions into a discrete choice experiment for meat products at a grocery store. Our results indicate that taste is the most important perception as a 1-unit increase in the perceived tastiness (on a −5 to +5 scale) of a food product leads to a $0.60 increase in willingness to pay, whereas equivalent increases in perceived health and safety lead to $0.31 and $0.21 increases, respectively.

Social critics have taken aim at modern production agriculture using a common theme: many food, health, and environmental problems are explained by corporate farms, agribusinesses, and fast-food restaurants failing to account for the full costs of their actions. How accurate is this diagnosis? How feasible is the assumption that these externalities are most effectively mitigated via Pigovian taxes and subsidies? Drawing on my experiences at a National Institute of Medicine meeting on the subject, I seek to clarify the definition and nature of externalities and discuss situations in which public policy is most and least effective in efficiently making “hidden” costs of food visible.

The number of meat recalls has increased markedly in recent years. This research examines the impact of beef and pork recall announcements on nearby daily live cattle and lean hog futures market prices, respectively. Results indicate medium-sized beef recalls that are of serious health concerns have a marginally negative impact on short-term live cattle futures prices. However, results are not robust across recall size and severity. This research suggests that if there is any systematic change in cattle and hog demand due to meat recalls, it likely occurs over an extended period of time and only in certain cases does it noticeably affect daily futures prices.

It is now fashionable in many circles to advocate vegetarianism, and many activist groups are vocal in their aim to convert the human race to vegetarians. What would be the economic costs and benefits of a shift away from meat consumption? In this article we provide some partial answers to this question. In three separate analyses we show (i) that it is much more costly to produce energy and protein from animal-based sources than from some plant-based sources, (ii) that sizable demand shifts away from meat consumption would result in significantly lower corn prices and production, and (iii) that the average U.S. consumer places a higher value on having meat in his or her diet than having any other food group. This information should help move forward our understanding of the economics of vegetarianism and provide an objective stance from which to evaluate the claims being made by advocates of vegetarianism.

The present article discusses general issues associated with experimental auctions and their relative advantages and disadvantages over other marketing research techniques. Experimental auctions create an active market environment with feedback where subjects exchange real goods and real money, which is not generally the case with other methods. The article also discusses four experimental design issues associated with experimental auctions: auction mechanism, market feedback and bidder affiliation, demand reduction and wealth effects, and multiple attribute valuation. Each of these experimental design issues, if not properly controlled, have the potential to create serious flaws in marketing recommendations.

The effects of various supply and demand shifts on beef price, quantity, and industry welfare have been widely studied under the assumption of beef quality homogeneity. In this paper, we construct a model of the beef sector that incorporates differences in beef quality. The model is used to analyze the effect of supply and demand shifts on changes in prices and quantities of high- and low-quality beef and changes in revenue accruing to producers of high- and low-quality beef. Model results indicate that supply and demand shocks have the potential to alter the average quality of beef on the market and the price premium charged for high-quality beef, which has important implications for retailers selling quality-differentiated beef and producers selling cattle on a grid.

As the farm-to-retail price spread continues to grow, some cattle producers are beginning to consider integrating into the retail sector. Such a venture would require large investments in capital with uncertain return. This study seeks to determine the potential success of a stand-alone retail outlet selling “all natural” beef in an affluent area of Jackson, MS. Using choice-based conjoint analysis, demand for the new retail outlet is modeled as a function of the beef price at the store, distance of the store from consumers' homes, distance of the store from consumers' typical grocery store, and price of beef at substitute grocery stores. Simulation results suggest the proposed outlet could be a profitable venture, depending upon location and beef price.

This study estimates the value of policies that would mandate labeling of beef from cattle produced with growth hormones or fed genetically modified corn. At no cost, 85 percent of respondents desired mandatory labeling of beef produced with growth hormones and 64 percent of respondents preferred mandatory labeling of beef fed genetically modified corn. Estimates suggest that consumers would be willing to pay 17.0 percent and 10.6 percent higher prices for beef on average to obtain information provided via mandatory labeling about whether the beef is from cattle produced with growth hormones or fed genetically modified corn, respectively.

As a result of several judicial rulings, processing of horses for human consumption came to a halt in 2007. This article determines the change in horse prices resulting from elimination of horse-processing facilities. As expected, lower-valued horses were more affected by the ban than higher-valued horses. The analysis suggests the slaughter ban reduced horse prices, on average, by about 13% and resulted in a loss in producer surplus to sellers of approximately 14% at the sale we analyzed. We also show horse prices are affected by a myriad of factors including breed, gender, age, coat color, and sale catalog description.

In-person interviews were carried out with Mexican millers who were administered a conjoint-type survey designed to incorporate uncertainty in attribute levels. Two methods were used to model millers' risk preferences: a modified mean-variance approach and an explicit expected utility approach. Controlling for variability, Mexican millers are willing to pay premiums for increases in quality factors such as test weight, protein content, falling number, and dough strength/extensibility. We find millers are not particularly sensitive to changes in the variability of quality characteristics. Out-of-sample forecasts suggest the mean-variance model provides an accurate depiction of actual Mexican imports.

Field experiment data were used to study the effect of numeric calorie labels in two full-service restaurants. Ultimately, both field experiments, despite using different experimental designs, reached the same conclusion: the numeric calorie label had no significant effect on total caloric intake. However, results revealed the addition of a traffic light symbol to the numeric label led to a 67.8-kcal reduction in average calories ordered. Furthermore, results showed restaurant revenue is unlikely to be affected by the addition of calorie labels on menus. The results have implications for restaurant labeling laws that are being considered around the world.

With this study, we investigate the effects of changes in economic factors on body weight by constructing a utility theoretic model. The model is empirically estimated by combining data on individuals' body weight, demographic and physical activity information, and state-level measures pertaining to the prices of food away from home, food at home, and wages. By combining these data sources, we aim to estimate directly the weight effects of price and income changes. The empirical analysis suggests that decreasing the price of food at home could decrease body weight, a finding which has important public policy implications.

After California voters decided in a state initiative to ban gestation crates and battery cages, some are asking whether other states will host similar initiatives and if they will pass. This study addresses this question by using voting data in California to predict how voters in other states would respond to a similar initiative. Results suggest that a number of states allow such initiatives and possess a demographic profile favorable to the initiative's passage. However, because these states host only a small portion of the livestock population, the impact of such initiatives on the well-being of farm animals is questionable.

Scientists and beef industry participants are investigating ways to improve the healthiness of beef. We report results of a nationwide mail survey developed to determine Consumers' preferences for fat content in ground beef and identify how consumers would most like to improve the healthiness of beef. The results from a choice-based conjoint experiment indicate that consumers place significant value on reducing saturated fat and the Omega 6:3 ratio in ground beef, but were relatively unconcerned about conjugated linoleic acid. The relatively new method of best-worst scaling was used to further identify which methods consumers most preferred producers use to improve fat content in beef. The results indicate consumers preferred feeding cattle a grass-fed diet as opposed to supplementing cattle feed with fish-meal or flaxseed to improve the fatty acid content in beef. Although consumers were receptive to the idea of using genetic testing to breed only those cattle with improved fatty acid content, using cloning to achieve this end, was viewed as very undesirable.