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Food Safety Information and Food Demand Effects of Temporary and Permanent News

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Abstract

This paper examines the cross-impacts of food safety news concerning one product on the demand for another product, using the Danish demand for pasteurized eggs versus shell eggs as an illustrative case. The study identifies news with a temporary impact and news with a permanent impact on consumers' food demand behavior. The techniques used to identify the permanent versus temporary news are recursive estimation and parameter stability. Whereas "permanent" news is identified to be represented by a specific individual event, "temporary" news concerning salmonella in eggs is aggregated into a news-index variable. Both temporary and permanent news concerning salmonella in shell eggs appear to have significant positive impacts on the demand for pasteurized eggs. The model is estimated as an Error Correction Model. Consumers are found to adjust quite rapidly to both temporary and permanent news. Both the composition of egg consumption accounted as mean budget shares varies across socio-demographic household groups as well as the impact of the considered permanent news.

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