How Safety Recalls Affect Consumer Preferences for Eggs: An Experimental Analysis

Abstract

This study analyzes a unique data set to estimate how consumers respond to food-­‐safety recalls. In August 2010, more than half a billion eggs were recalled because of a Salmonella outbreak. We conducted experimental auctions shortly before and after the recall outside the affected area. Our results suggest that the recall had a heterogeneous effect on consumers’ willingness to pay for both conventional and organic eggs rather than causing a unidirectional shift, and in general, the recall did not lead to a statistically significant change in consumer preferences for shell eggs. This seemingly counter-­‐ intuitive finding coincides with prior empirical evidence regarding how safety recalls affect consumer behavior. In addition, we examined if providing additional positive information on the recall can mitigate the negative media information. Results show that it has a marginally significant positive effect on consumer willingness to pay for conventional eggs.