Fear and Trust: How Risk Perceptions of Avian Influenza Affect the Demand for Chicken

Abstract

This article quantifies the impact of H7N9 bird flu on chicken demand and consumer willingness to pay (WTP) in China. The surveys were administered to the same group of respondents in April 2012 and 2013. In 2012 we asked generic questions regarding food safety in chilled chicken without any mentioning of bird flu and in 2013 in the midst of the outbreak we resurveyed the group again. Since these respondents were surveyed both times (before and after the bird flu outbreak), the data formed a “natural experiment”. We measure risk perception, fear and trust against actual reduction in consumption and stated change in WTP for safe chicken between 2012 and 2013. Through a survey conducted in each year on the same Chinese urban consumers, we are able to construct a Marshallian-Hicksian elasticity measure signifying the relative welfare loss from a food risk. Furthermore, we found that: (1) like fear, the impact of distrust (especially the distrust in government) was negative for consumption; (2) macro fear of H7N9’s spreading, and distrust in government enhanced the deviation of consumption and WTP; (3) stronger consumer heterogeneity in consumption existed in cities with higher number of incidences; (4) the sheer mentioning of H7N9 is more important and negative than whether it was associated with a risk-perception reducing or risk-perception elevating message given to consumers; and (5) unlike what the conventional theory would predict that upon the rising of a specific risk factor, demand will drop and WTP for safter products will increase, while consumption of chicken never increased after the emergence of H7N9 in 2013, WTP for safer chicken did not increase either relative to generic risks associated with consuming chicken in 2012.