Willingness to pay for food safety: sensitivity to duration and severity of illness.

There is a mismatch between the incidence and economic valuation of food-borne illness. The vast majority of cases result from exposure to microbial pathogens (e.g., E. coli O157, Salmonella) and consist of short-term illnesses that last from one to a few days. Yet research on valuation of health risk has been dominated by the study of mortality risk. Economic Research Service and other estimates of the value of reducing morbidity risk have been forced to rely on cost-of-illness measures that include productivity and medical costs but exclude pain and suffering, lost leisure time, disruption of daily activities, and other components. To help fill this gap, we provide stated-preference estimates of the value of reducing risk of foodborne illness, focusing on short-term morbidity.

We design and conduct a stated-preference survey to estimate willingness to pay (WTP) to reduce the risk of food-borne illness of specified severity and duration. The following sections describe the survey instrument, sample, and results. We find that the value per statistical case avoided is larger for risk to children ($23,600-$30,500) than to adults ($8,300-$16,400) and is surprisingly insensitive to duration (one to seven days) and severity of illness (mild discomfort to hospitalization). Estimated WTP is larger for women, Blacks, Hispanics, and respondents who observe safe food-handling practices or perceive their risk to be higher than average and larger for risks transmitted on chicken than on ground beef or packaged deli meat.

Survey Instrument and Sample

The survey instrument is organized as follows. First, respondents are asked about their experience with food-borne illness and their perception of how common it is in the United States. Second, they complete a tutorial designed to help them practice making trade-offs between food price and safety. The tutorial introduces a visual aid to help communicate risk. The visual aid contains red and white areas representing 10,000 meals, where the fraction colored red equals the probability of illness (Corso, Hammitt, and Graham 2001).

Third, respondents are asked to consider buying food for a meal that only they will eat, randomly selected from (chicken, ground beef, packaged deli meat). After answering questions about their typical consumption frequency and serving size (respondents who do not eat the selected food are asked about another), respondents are told their baseline probability of illness (2 x [10.sup.-4], 4 x 10-4 per meal), the symptoms associated with illness (mild, moderate, severe),1 duration (one, three, seven days), conditional mortality risk (0, [10.sup.-4], [10.sup.-3]), and informed that they could reduce their risk to 1 x [10.sup.-4] per meal by purchasing a safer but more expensive type of food. The baseline and reduction in probability are communicated using the visual aid described above. The risk reduction is described as produced by a stringent safety program established and monitored by the U.S. government that does not use chemicals or irradiation (which some respondents may believe would present other risks). WTP to reduce the probability of illness is elicited using double-bounded, dichotomous-choice questions (Hanemann, Loomis, and Kanninen 1991) with initial bids ranging from $0.04 to $4.00 per meal and follow-up bids equal to twice or half the initial bid as appropriate. After the valuation questions, respondents answer follow-up questions about their food-handling practices, acceptance of the hypothetical scenario, and personal characteristics.

Each respondent values two risk reductions that differ by reduction in probability of illness, severity and duration of symptoms, conditional mortality risk, and food (chicken, ground beef, packaged deli meat). Attributes are randomly assigned using a full factorial design. Respondents living in a household with a child aged two to eighteen years value one risk to themselves and one to a randomly selected child in the household (in random order); other respondents value two risks to themselves.

To test for framing effects, respondents complete a version of the survey with risks and costs expressed per meal (as described above) or per month (converted from per-meal values using respondent-reported consumption frequency). If WTP is proportional to probability reduction, estimated values per case will be the same.

The survey was fielded to 6,368 randomly selected members of a demographically representative panel maintained by Knowledge Networks. Households were recruited to the panel using random-digit dialing and provided free Internet access and hardware as a participation incentive. In total, 3,902 interviews were completed in several waves between August and October 2004, yielding a response rate of 61%. We exclude 136 respondents who do not eat any of the three foods (N = 107) or declined to answer the WTP questions (N = 29), leaving 3,766 respondents for analysis.

Results

This section describes respondent characteristics and how estimated WTP varies with risk and respondent characteristics.

Respondent Characteristics

Descriptive statistics are reported in the first column of table 1. Statistics for the subsamples of respondents living in households with and without children are similar to the full sample except age (mean 37 and 48, respectively), married (68% and 48%), household size (3.6 and 2.2), and college degree (21% and 27%).

On average, respondents estimate that 33% of the U.S. population contracts food-borne illness in a year, roughly compatible with an official estimate of seventy-six million cases per year (Mead et al. 1999). Respondents are significantly more likely to eat chicken and ground beef than packaged deli meat, which results in 40%, 35%, and 25% of respondents answering their first question about chicken, ground beef, and packaged deli meat, respectively. Most respondents report taking precautions when preparing food: 62% report consistent hand washing and 67% report taking one or more recommended steps to ensure that food is fully cooked or otherwise safe to eat. In questions relating to acceptance of the hypothetical scenario, 48%, 39%, and 13 % of respondents perceive their risk of foodborne illness to be similar to, smaller than, and larger than that presented in the survey, respectively.

Effects of Risk and Respondent Characteristics on WTP

We model WTP as a function of the severity and duration of illness, reduction in probability, and respondent characteristics. Regression models are estimated assuming a log-normal error term and using maximum-likelihood methods (Alberini 1995). We estimate separate models for WTP to reduce own risk for respondents with and without children in the household and for WTP to reduce a child's risk. Results are in table 1. We first describe Models 1, 3, and 5, which include only risk characteristics and then Models 2, 4, and 6, which add respondent characteristics.

For respondents in households without children, WTP to reduce own risk increases with reduction in probability of illness, symptom severity, duration, and conditional mortality risk (Model 1). Estimated WTP is 35% and 47% larger for moderate and severe than for mild symptoms (2) (the difference between WTP for moderate and severe symptoms is not statistically significant). WTP is only modestly sensitive to duration; compared with one day, it is 29% larger for seven and 6% larger (not significant) for three days. Estimated effects of conditional mortality risk are not significant, but the point estimates imply a value per statistical life (VSL) of $9-25 million, (3) which is somewhat larger than conventional estimates (e.g., $7 million, Viscusi and Aldy 2003; $5.4 million, Kochi, Hubbell, and Kramer 2006). WTP is significantly greater for the larger reduction in probability of illness but the proportionate increase (1.85) is significantly smaller than the threefold increase required by conventional theory (consistent with most stated-preference studies: Hammitt 2000; Hammitt and Graham 1999). In contrast, estimated WTP per month is 5.85 times larger than per meal. This ratio is nearly equal to the average frequency of consumption (5.68), which suggests that estimated values of risk reduction are not sensitive to the alternative framing.

For respondents living in households without children, estimated WTP to reduce own risk is less sensitive to the risk characteristics. In Model 3, the estimated coefficients of the risk reduction, duration, severity, and mortality-risk variables are smaller than the corresponding estimates for households without children (Model 1) (except the coefficient on severe symptoms is negligibly larger). Standard errors are larger, in part because of the smaller sample size, and only the coefficients on severe symptoms and the per-month framing differ significantly from zero. Similarly, estimated WTP to reduce risk to a child (Model 5) is insensitive to duration, severity, and mortality risk, with estimated coefficients of these variables smaller than the corresponding estimates in Model 1 (except the coefficient on three-day duration is negligibly larger). The estimated coefficient on risk reduction is significantly greater than zero but also significantly smaller than required for WTP to be proportional to risk reduction.