Technical Working Paper 04-111

BSE in Japan: Consumers’ Perceptions and Willingness to Pay for Tested Beef, J. McCluskey, K. Grimsrud, H. Ouchi, & T. Wahl January 2004

Abstract

The discovery of BSE, commonly known as "mad cow disease," in Japan caused anxiety about consuming beef and beef products. As a result, there was a sudden fall in sales of beef, which hurt the Japanese beef industry as well as major beef exporters to Japan. We analyze factors that affect Japanese consumers' willingness to pay price premiums for BSE-tested beef and estimate the mean willingness to pay (WTP) for BSE-tested beef using data obtained from a consumer survey in Japan. A single-bounded dichotomous choice contingent valuation model that recovers the premium amount as a threshold is used for these purposes. We find that food safety and environmental attitudes, reduction in beef consumption following the BSE outbreak, and being female all have a statistically significant positive effect on the WTP for BSE-tested beef. In our sample, consumers are willing to pay a premium on average of greater than 50 percent for BSE-tested beef.