Structural Change in U.S. Consumer Response to Food Safety Recalls

Abstract

This study presents evidence of a structural change in consumer behavior to recalls of ground beef made by the Food Safety Inspection Service (FSIS) after the December 2003 announcement confirming the discovery of a dairy cow infected with Bovine Spongiform Encephalopathy (BSE) in the United States. A conditional, fixed-effects logit model was estimated using household-level data of biweekly fresh ground beef purchases from 1999 through 2005. The household consumption data were matched with ground beef recall data from FSIS over the same period. The results of the estimation indicate that while recalls of ground beef do not have a measurable impact on the probability of a household purchasing ground beef in a given two week period prior to the BSE event, there is a statistically significant and negative effect after the event. The findings from this research suggest a longer-term impact on consumer demand not previously detected by other studies.