Valuing lives saved from safer food--a cautionary tale revisited.

Prioritizing risk-reduction strategies to maximize net benefits requires information on the monetary value people assign to safer food (Roberts 1986). The challenge is that individual behavior reflects more than just unobserved preferences for risk reduction. Behavior also reflects each person's unobserved and potentially unique food risk and ability to reduce this risk privately, through consumption patterns, food preparation, cleaning efforts, and so on. Risk is endogenous (Shogren and Crocker 1991). People with a low valuation of collective risk reduction may seem to tolerate greater risk, but they may instead have already used unobservable skills to reduce the risk themselves. Food selection alone is unlikely to reveal perfectly these two characteristics--risk preferences and risk reduction technology--because multidimensional heterogeneity exists in the population. In such cases, we propose using a General Method of Moments (GMM) framework to separate risk reduction activities from risk preferences (Shogren and Stamland 2002, 2006).

Our promotion of GMM presumes that people can make food choices based on the differentiated risks of different foods and gauge the appropriate responses to these risks. The open question, however, is whether people actually do differentiate low-probability food risks and respond accordingly and consistently. In experimental auctions designed to value safer food, Hayes et al. (1995) found evidence of surrogate bidding (also called embedding, part-whole bias, or insensitivity to scope).

Surrogate bidding exists when behavior-either risk perceptions or values--for a specific good reflects general preferences for a phenomenon rather than for the specific good in question, or when perceptions and values are insensitive to changes in the quantity or quality of the good. Hayes et al. (1995) compared the bidding behavior from food-borne pathogen treatments to the bids in a treatment that combines the risks of all the pathogens. They observed surrogate bidding for reduced health risk; bids for a cluster of pathogens were indistinguishable from bids for specific pathogens.

Using a contingent valuation survey, Hammitt and Graham (1999) reproduced the Hayes et al. (1995) study, and found the same insensitivity to probability. In addition, Bateman et al. (1997) found similar results for "parts" versus a "whole" restaurant meal. Using an incentive compatible mechanism to auction off parts of a restaurant meal (e.g., appetizer, main course, desert), they observed the sum of the parts exceeded the value for the whole meal. The results support the idea that values for specific food items can reflect general preferences for food.

Multidimensional heterogeneity and surrogate bidding undercut the traditional approaches people use to estimate the value of safer food. First, one should separate out unobservable risk preferences from risk-reduction skill assuming differentiated responses to risk; second, one should test for whether the perceptions of risk and the responses to risk are rational to begin with. We use the GMM method to address the first task of identification of risk preferences, and we can use internal consistency checks to address the question of differentiated responses and reactions to risk. Here we describe the initial results on rational risk valuation for safer food using data from Wave I of the University of Wyoming (UW) Food Web Diary project. We designed the UW survey to provide the data needed to use a GMM framework to obtain improved valuation estimates in the face of multidimensional individual heterogeneity. (1)

The UW survey captures the idea that each respondent has an idiosyncratic mortality risk from each risk source, an idiosyncratic ability to reduce each risk, and his or her own value of statistical life. We allow consumers to be heterogeneous in several observable and unobservable dimensions: tastes, budgets, base-level risks, abilities to reduce risk, and willingness to pay for risk reduction. Given this heterogeneity, rational people should choose different consumption levels based on different levels of risk. We test for rationality by asking several questions in the diary about risk perceptions and responses to risk. We create two tests of internal consistency: identical risk perception questions for three meats and an identical risk reduction asked in two ways. Overall, even for a relatively familiar commodity-related food, our results do not contradict the cautionary tale told by those concerned with surrogate behavior, such as Kahneman and Knetsch (1992). On average, we observe that the same question generated different responses (identical risk but different responses), and that different questions generated the same answer (insensitivity to different risks posed by pork, beef, and chicken).

Design of Survey

The UW survey design consisted of five parts: general health status; risk-taking behavior, knowledge of food safety and risk-reduction actions; awareness of effectiveness to reduce the risks of food-borne illnesses; and risk perceptions of food-borne illnesses. We also elicited socio-demographic information. First, we asked questions to learn about the general condition of the subjects' health: Q1. Are you (or your partner) currently pregnant? Q2: Is there anybody smoking in the family? Q3. Are you exposed on a regular basis (daily/weekly) to second-hand smoke? Q4. Is there exposure to second-hand smoke inside your household? Q5. Do you consume more than two alcoholic beverages per day? Q12. How would you rate your physical health compared to others your age and gender? Q18. Does anybody in your family have specific dietary needs due to a medical condition?

Second, we asked questions about the respondents' general effort to self-protect: Q6. Imagine you will be in a vehicle 10 times. How many times would you say you would: (a) wear a seatbelt as a driver or a passenger, and (b) drive more than 5 mph over the speed limit? Q7. Do you have a smoke detector in the house? Q8. Do you change your batteries in your smoke detectors at least once every year? Q9. Do you have a carbon monoxide detector in the house? Q10. Do you have a first-aid kit in the house? Q11. Do you have a fire extinguisher in the house?

Third, we asked one multipart question about food preparation: Q33. Out of 10 meal preparations for the relevant food, how frequently do you:

1. Wash your hands with hot soapy water before handling food?

2. Wash your hands with hot soapy water after handling raw meat products?

3. Wash utensils and surfaces immediately with hot soapy water where meals are prepared?

4. Wash utensils and surfaces with hot soapy water after preparing each food item and before you go onto the next food item?

5. Wash vegetables and fruit?

6. Cook meat products to a safe temperature recommended by health experts?

7. Refrigerate leftovers within two hours of preparation?

8. Use nonexpired food?

9. Use a separate cutting board for raw meat products and other nonmeat items?

10. Use a meat thermometer?

11. Use plastic or other nonporous cutting boards?

12. Separate raw meat, poultry, and seafood from other foods in your shopping cart?

13. Separate raw meat, poultry, and seafood from other foods in your refrigerator?

14. Place cooked food on a plate that previously held raw meat, poultry, or seafood?

15. Cook eggs until the yolk and white are firm?

16. Use recipes in which eggs remain raw or only partially cooked?

17. Cook fish until it is opaque and flakes easily with a fork?

18. Cover microwave food, stirring and rotating it?

19. Bring sauces, soup, and gravy to a boil when reheating?

20. Defrost food at room temperature?

Fourth, we asked four specific questions about the subjects' perception of the effectiveness of the four-key risk-reduction methods for food-borne pathogens: washing, separating, cooking, and prompt storage for one of the three meats beef, pork, or chicken. For each question, the respondent checked off one of the intervals from (91-100%); (81-90%), ..., (1-10%). Q43. How effective is washing one's hands, utensils, and food before a meal in reducing the risk of food-borne illness from this food? Q44. How effective is separating raw meat/poultry/seafood from other foods and using a different cutting board for raw meat products in reducing the risk of foodborne illness from this food for a meal? Q45. How effective is cooking food to proper temperatures in reducing the risk of food-borne illness from this food for a meal? Q46. How effective is prompt storage and refrigeration in reducing the risk of food-borne illness from this food for a meal?

Next, we wanted to understand perceptions toward the changed effectiveness if the respondent cut in half (or doubled, depending on survey) the frequency of washing, separating, cooking, and prompt storage, again for the three meats. For each question, the respondent circled an integer value ranging from 5 (large decrease) to -5 (large increase). For example, subjects were asked: Q48. If you cut in half the number of times you washed your hands, utensils, and food before a meal, how much would your risk for each type change?

Fifth, we are interested in each person's risk perception about food-borne illness. We asked two questions: Q21. Please mark the point that you think best represents how frequently A TYPICAL AMERICAN can be expected to suffer a food-borne illness in any given year. How Often Frequency (In Terms of