EEP101_12_Kristin

EEP101_12_Kristin - Lecture 12: Food Consumption and...

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Kristin Kiesel UC Berkeley Lecture 12: Food Consumption and Labeling Policies
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Information provision as alternative policy tool to address externalities Organic labeling Nutritional labeling and the food guide pyramid (non-biotech or non-GMO labeling) Policy context as determinant of success Food consumption Interdependencies with marketing efforts and media coverage Motivation and Outline
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Objective Does availability of information insure that it will be incorporated into consumer behavior? If not, which aspects of informational changes under labeling regulations are most effective in altering consumer behavior? A better understanding of the interplay between regulation, media coverage, and product marketing helps determine which regulatory tools best serve consumers interest and policy objectives at the same time
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Food Consumption For any policy evaluation, its history and context need to be well understood Traditional analysis of food demand Two influential models in analysis of additional aspects Additional determinants of individual food consumption General trends in food consumption
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Traditional Analysis of Food Demand Food demand depends on: quality (nutritional value, taste, food safety) prices and income Increase in prices lead to reduction in consumption (“law of demand”) Impacts of income on consumption Luxury goods : increase in income results in more than proportional increase in consumption (filet mignon) Normal good : increase in income results in less than proportional increase in consumption (cheese) Inferior good : increase in income results in reduction in consumption (canned peas) Illustration: 5% increase in income will increase consumption of filet mignon by 8%, increase in consumption of cheese by 4%, and reduce canned peas consumption by 7%
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The demand for a specific food product depends on the price of other food products Complements: (peanut butter and jelly, bread and butter) increase in price of one will reduce the demand for the other (higher peanut butter price will reduce demand for jam) Substitutes: (butter and margarine, corn syrup and sugar) increase in price of one will increase the demand for the other (higher butter prices will increase the demand for margarine). Traditional Analysis of Food Demand (cont.)
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Seasonality and availability constraints Turkey demand surges at Thanksgiving Prices and quality of fruits and vegetables: Additionally, most people shop at a particular supermarket, limiting their range to the assortment of that store Traditional Analysis of Food Demand (cont.) Time Middle of season p r i c e Prices of fruits and vegetables are lowest in the midst of season when the quality is best
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Two Influential Theoretical Models Household production function (Becker 1965, Lancaster 1966): Logic of production functions applied to consumer side: products are purchased in the market as inputs, and utility
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EEP101_12_Kristin - Lecture 12: Food Consumption and...

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