Canadian Consumer Responses to BSE with Heterogeneous Risk Perceptions and Risk Attitudes

The objective of this study is to quantify the impact of bovine spongiform encephalopathy (BSE) on Canadian household meat-purchasing behavior, distinguished by varying risk perceptions and risk attitudes. Using panel data from 2002 to 2007 and a survey conducted in January 2008, households are clustered by the survey respondent's risk perceptions and attitudes toward beef. For each cluster, two-stage meat demand systems are constructed, incorporating the demographic characteristics of the households and BSE media coverage. The analysis for the entire panel and for each of the clusters suggests that beef risk attitudes and perceptions do affect household-purchasing behavior. Households with lower willingness to accept the risks of eating beef have more elastic beef demand and more willingness to substitute beef for other meats as compared to the household clusters with higher willingness to accept the risks of eating beef. BSE media coverage has stronger negative influences on households with lower willingness to accept the risks of beef. Across the entire sample, beef demand is more responsive to media coverage of BSE after the May 2003 domestic BSE case.