BSE in North America: Consumer perceptions and willingness to pay for tested beef

Matthew Luke Moore

The objective of this thesis is to better understand consumer preferences for beef after the discovery of Bovine Spongiform Encephalopathy (BSE), commonly known as “Mad Cow Disease,” in the United States. This objective is accomplished with an empirical study and willingness to pay for BSE-tested beef. An social accounting matrix (SAM) Input-Output model using IMPLAN to analyze the effect of the demand shock from BSE on the Washington State economy when all beef exports are stopped. The thesis estimates the premium U.S. consumers are willing to pay for beef labeled as BSE-tested as well as factors affecting their willingness to pay (WTP) for the beef. Data was collected in a consumer survey conducted in Seattle, Washington. A double-bounded dichotomous choice contingent valuation model was used to analyze factors affecting WTP for BSE-tested beef and to estimate a mean WTP for BSE-tested beef. From the survey, consumers consider themselves somewhat knowledgeable about BSE. Consumers know that variant Creutzfeldt - Jakob disease (vCJD) is contracted from eating BSE-infected beef. However, they had little knowledge about prion diseases. Consumers believe U.S. beef is still somewhat safe and think it is very important to test for BSE. Most consumers prefer beef originating from or produced in Washington and will choose BSE tested beef over regular non-tested beef, assuming equal quality and taste. Over half of the consumers did not change their consumption patterns of beef after the BSE news. Seafood and chicken are the main substitutes for conventional beef when consumption patterns did change. Half of the consumers have taken some precautions when buying beef. The U.S. Department of Agriculture is the source respondents’ trust most for a reliable source of BSE information. Most agree on the implementation of a national identification system for beef. The estimated mean that consumers are willing to pay for BSE tested beef over regular non-tested beef is a 58.7% premium. The discrete choice model is used to measure the impacts of food safety concerns, knowledge of BSE, risk, consumption frequency, demographics, price versus safety, and economic growth versus saving the environment. Model estimation reveals three very important factors having a significant impact on this study were how people felt about the overall safety of U.S. beef, whether consumers preferred beef produced in Washington, and the precautions consumers take when buying beef.

BSE in North America: Consumer perceptions and willingness to pay for tested beef

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