Consumer and Market Responses to Mad Cow Disease

Abstract

We examine how consumers and financial markets in the United States reacted to two health warnings about mad cow disease: the first discovery of an infected cow in December 2003 and an Oprah Winfrey show that aired seven years earlier on the potentially harmful effects of mad cow disease. We find a pronounced and significant reduction in beef sales following the first discovery of an infected cow in a product-level scanner data set of a national grocery chain. Cattle futures show a pattern of abnormal price drops comparable to the scanner data. Contracts with longer maturity show smaller drops, suggesting that the market anticipated the impact to be transitory. Cattle futures show abnormal price drops after the Oprah Winfrey show, that are, more than 50% of the drop following the 2003 discovery of an infected cow.

Differential effects of negative publicity on beef consumption according to household characteristics in South Korea

“…Jin [6] showed that news regarding the BSE outbreak in Japan decreased S. Korean beef consumption, but increased pork consumption as a substitute. Schlenker and Villas-Boas [7] examined how consumers and financial markets in the US reacted to the first-time discovery of a BSE infected cow in December 2003, besides an Oprah Winfrey show that had aired seven years earlier on the potentially harmful effects of BSE. Based on the product-level scanner dataset of a national grocery chain, they found a pronounced and significant reduction in beef sales following the first-time discovery of an infected cow.…”

“…Also, by including the variables of 'dietary patterns,' we may illustrate how each household reacted differently, according to their dietary preferences. 7 Finally, the variable of 'health related expenditure' may explain whether those who spend more on health-related activities were more susceptible to the food-scare event. The system of equations was estimated using the SUR method.…”

Soda Wars: The Effect of a Soda Tax Election on University Beverage Sales

“…First, our results are consistent with models where consumers update their beliefs and behaviors based on information provided by the media and by advisory campaigns. Several studies show that new information about food‐related health problems, food safety, and animal safety can alter preferences and consumer demand (Brown and Schrader ; Chavas ; Lusk ; Schlenker and Villas‐Boas ; Van Ravenswaay and Hoehn ; Yen and Jensen ). The approach of our analysis is particularly close to Lusk (), who uses scanner data to examine how consumer demand for eggs changed in the months leading up a statewide election on whether to bar the use of cages in California egg production.…”

Ethical and Sustainable Aspects of Meat Production; Consumer Perceptions and System Credibility

“…In some situations, people may feel reluctant to turn their personal beliefs and social norms into practice or powerless over the situation, for instance, in the case of health hazards. Even in the United States, the consumption of beef dropped significantly years before the first United States outbreak in 2003; this was partly ascribed to a popular television show (Oprah Winfrey) warning about potential harmful effects (Schlenker and Villas-Boas, 2009). Further, some major health hazards have greatly impacted the consumption of meat.…”

“…That the media plays an important role in influencing attitudes and behavior toward meat has been highlighted by several studies (e.g., Schlenker and Villas-Boas, 2009). Media messages often influence how consumers respond to health hazards in the meat market, including, for instance, the fear of avian flu (Van den Bulck and Custers, 2009).…”